Occasionally, the creditors of a struggling business will petition a court to have a receiver appointed to manage the affairs of the business. Once appointed, the receiver steps into the shoes of the business owner to take whatever actions have been approved by the court to either manage the affairs of the business or to wind down and liquidate the business’ assets.
Prior to the court’s appointment of a receiver, a motion must be filed by the party requesting one. Courts have wide discretion in determining whether to appoint a receiver. The court’s order of appointment will outline the receiver’s powers. Ohio statutes give receivers the authority to bring and defend court actions, obtain and keep possession of real and personal property, collect rents and other obligations, enter into contracts, sell and transfer real or personal property, execute deeds and leases, open and maintain bank accounts, and any other actions as authorized by the court. Because the legislature has afforded courts significant discretion in crafting the powers of a receiver in a given case, it is imperative that business owners challenging the appointment of a receiver have experienced counsel in order to contest appointment, but also to argue for limitation of those powers if appointed.
Alternatively, Court-appointed receivers may also choose to obtain counsel to aid and advise them in connection with the original order including expanding the receiver’s powers permitted by Ohio law, and advising the recievers as they carry out their duties. Receivers owe fiduciary duties to the parties and the assets in the case. The receiver will be required to conduct an inventory of the business assets and will need to work with that business to obtain the necessary materials and cooperation. Legal representation can facilitate this process. The receiver must also be cautious to be neutral in the case, and not to favor any particular creditor of the business. In executing his duties, the receiver may need to file suits against creditors, or even the business owners, if the circumstances warrant. Experienced counsel can help decipher if such actions are warranted.
Dworken & Bernstein’s attorneys are experienced at representing both court-appointed receivers and those business owners fighting the appointment of a receiver before, during, and after the appointment process. Our attorneys will counsel the business owner or receiver on their various powers and rights throughout the receivership process and navigate the various legal filings and maneuverings.