A Court Appointed Sacramento Partnership Dispute Receiver Is Here to Help

Partnership or LLC receivership appointments in California arise under California Code of Civil Procedure section 564. A receiver appointed as an equity receiver, taking possession of one hundred percent of the receivership entities, steps into the role of management and makes decisions regarding operations and assets pursuant to court order. The receiver’s role is defined by the order appointing receiver and generally focuses on preserving the status quo between the parties pending resolution of the underlying litigation. As a neutral agent of the court, the receiver acts for the benefit of all interested parties, including creditors. Assets are held by the court through the receiver rather than by the disputing parties.

California Civil Code procedure section 664 identifies the statutory circumstances supporting the appointment of a receiver, including the following:

(b) A receiver may be appointed by the court in which an action or proceeding is pending, or by a judge of that court, in the following cases:

(1) In an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject any property or fund to the creditor’s claim, or between partners or others jointly owning or interested in any property or fund, where it is shown that the property or fund is in danger of being lost, removed, or materially injured.

(2) In an action by a secured lender for foreclosure of a deed of trust or mortgage where the property is in danger of being lost, removed, or materially injured, or where the security is likely insufficient to satisfy the debt.

(3) After judgment, to carry the judgment into effect.

(4) After judgment, to dispose of or preserve property during the pendency of an appeal, pursuant to the Enforcement of Judgments Law, or during the redemption period following foreclosure.

(5) Where a corporation has been dissolved, as provided in Section 565.

(6) Where a corporation is insolvent, in imminent danger of insolvency, or has forfeited corporate rights.

(7) In an action of unlawful detainer.

(8) At the request of the Public Utilities Commission pursuant to Section 1825 or 1826 of the Public Utilities Code.

(9) In all other cases where necessary to preserve the property or rights of any party.

(10) At the request of the Office of Statewide Health Planning and Development, or the Attorney General, pursuant to Section 129173 of the Health and Safety Code.

(11) In an action by a secured lender for specific performance of an assignment of rents provision in a deed of trust, mortgage, or separate assignment document. The appointment may be continued after entry of a judgment for specific performance if appropriate to protect, operate, or maintain real property encumbered by a deed of trust or mortgage or to collect rents therefrom while a pending nonjudicial foreclosure under power of sale in a deed of trust or mortgage is being completed.

(12) In a case brought by an assignee under an assignment of leases, rents, issues, or profits pursuant to subdivision (g) of Section 2938 of the Civil Code.

Subdivisions (b)(1), involving disputes between partners jointly owning property or funds, and (b)(9), where necessary to preserve the property or rights of a party, are most commonly invoked in Sacramento partnership and LLC disputes.