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Receiverships - Insolvent Debtors
Receivership is the process of appointment by a court of a receiver to take custody of the property, business and assets of a party to a lawsuit pending a final decision on disbursement or an agreement that a receiver control the financial assets of a debtor. In other words, a receivor is appointed by the court for the benefit of one or more creditors.
In some instances, a debtor depletes his or her assets either by neglecting them or by willfully selling the them piece by piece for less than fair market value. In most states where the creditor obtains a judgment, and in some states before a lawsuit, the creditor may ask the court to appoint a receiver over the assets.
A receiver who is appointed by the court has the following duties:
- Takes possession of the assets
- Collects the rents
- Uses the rents to maintain the property
- Uses the surplus monies to pay off the creditors
Source: Legal Remedies for Business Creditors
Edited by Michael C. Dennis