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What is a receiver?

A common questions we get is “what is a receiver?” In certain types of litigation, a court may appoint a receiver. A receivership is a provisional remedy. A receiver is a person or company that is neutral who takes possession of receivership assets pursuant to an Order Appointing Receiver. There are numerous state/federal statutes governing the receivership appointment process and underlying litigation must exist. A receivership is not a cause of action and a receiver is known as an extension of or an “arm” of the court.

“A receiver is a ministerial officer, agent, creature, hand, or arm of, and a temporary occupant and caretaker of the property for the court, and he represents the court appointing him, and he is the medium through with the court acts.” Pacific Independent Co. v. Workman’s Compensation Appeals Bd., 258 258 Cal. App. 2d 35, 65 Cal. Rptr. 429 (968).

A receiver is often appointed to preserve and maintain a property or business, with additional powers and duties prescribed in the order appointing receiver. Per the California Rules of Court, rule 3.1179 “The receiver is the agent of the court and not of any party, and as such: (1) Is neutral; (2) Acts for the benefit of all who have an interest in the receivership property; and (3) Holds assets for the court and not for the plaintiff or the defendant.”

In addition, based on the particular task that a receiver has been charged with, many other names are used to describe receivers, including the following:

The Different Names of a Receiver

According to their task

Pendent lite receiver or provisional receiver

Literally, a judicial officer assigned to preserve property pending the completion of litigation

Statutory receiver

One appointed by the court under specific statutory authority, rather than under the grant of authority found in the phrase “general usages of equity”

Ancillary receiver

One appointed to assist another, principal receiver in a case

Interim receiver

A person typically appointed for a specific period of time, pending a hearing on whether a permanent receiver should be appointed

Custodial receiver

A term that may be used to describe a receiver who merely holds property for the court, unlike a receiver who may be instructed to operate a company

Special receiver

Usually describing a receiver instructed to take possession of less than all assets of a person or business, sometimes called a “special master”

Sequestration receiver

A receiver instructed to hold property until the profits from all that property have paid the underlying debt or charge

Operating receiver

A receiver tasked with continuing the business operations of an entity

Friendly receiver

Used to connote a receiver appointed by agreement of the parties before the court

Regardless of the name used, every receiver’s duties and responsibilities are expressly set by the courts, principally in its appointing order. These numerous names reflect the breadth of the tasks judges entrust to receivers in conducting the court’s business.

A receiver is a neutral fiduciary appointed by the court, both state and federal, to take control and possession of all forms of assets involved in contentious litigation for the purpose of preserving and maintaining the assets pending the conclusion of the litigation, or to effect the sale of the assets to realize cash and to hold the same pending further court order.

The term “receivership” is the legal name given to a situation where a court appoints an impartial person (the receiver) to take possession of certain specified property to prevent deterioration, dissipation, loss or other detriment to the party requesting the appointment of a receiver, pending the outcome of the litigation (pendent lite).1

1 California Receiver’s Loyola III Receivership Law & Practice 2009 Seminar

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