What Is a Personal Receivership?

What Is a Personal Receivership?

Personal Receivership

A receivership is a court-appointed tool that can assist creditors in recovering funds in default and can help troubled companies avoid bankruptcy.

In addition, a receivership can be used to restructure a company’s finances and assets in order to return the company to profitability or to liquidate property to satisfy debt obligations.

Legal Requirements

Personal receivership is a legal process in which a court appoints a neutral professional to manage the assets, operations, and finances of an insolvent company. These professionals are often highly experienced in a number of areas, including real estate, finance, and bankruptcy.

A person who wishes to serve as a receiver must apply for an appointment. They must execute a bond in the amount the court specifies, conditioned that the receiver will faithfully discharge the duties of receivership in accordance with orders of the court and state law. In lieu of the issuance of a bond, a court may approve an alternative form of security.

If the court appoints a receiver, it gives him or her a wide range of powers, including taking charge of any nonexempt property to pay a debt. This includes financial accounts, real estate, stock certificates, and contractual interests.

The receiver can also take action to protect the interests of creditors and other people with a stake in the case. This could include negotiating payment plans and seeking permission from the court to collect money or property that is not exempt under Texas and federal laws.

A receiver must notify the owner’s creditors of his or her appointment by first class mail or other commercially reasonable delivery method and by publication if directed by the court. The notice must specify the date by which the owner’s creditors must submit their claims to the receiver.

Creditors must submit their claims to the receiver within thirty days of receiving the notice, unless the court reduces or extends this time for cause shown. Claims must be in the proper form and must not contain any false or misleading information.

In most states, the receiver is responsible for submitting monthly reports to the court. These reports must include a true list of all of the property identified by the receiver, and the estimated liquidation value and location of that property. The receiver must also file any and all motions that the court may order.

Many state and federal agencies have authority to appoint receivers for the purposes of protecting the public interest, such as in matters involving securities fraud, fraudulent transfers, or Ponzi schemes. Snell & Wilmer’s attorneys have experience representing and defending regulatory receivers in these situations.


Typically, a Personal Receivership is the logical next step when a secured creditor is unable to get a leg up on an unsecured lender in a debtor bankruptcy or insolvency proceeding. A Personal Receiver is tasked with figuring out how best to restructure a company to save it from bankruptcy or liquidation. Depending on the situation, the receiver may be required to handle the day to day operations of a business. It is an interesting and sometimes tumultuous job that can be rewarding in the long run.

Ideally, the receiver of choice should be well qualified with at least a master’s degree in finance, economics, real estate or other related disciplines, along with a solid track record of industry leadership in a comparable position. It is also important that the receiver has a clear understanding of their duties and responsibilities as well as a comprehensive knowledge of the local business, commercial, and court rules of engagement. This will enable them to deliver the results their clients are looking for in the most efficient and effective manner.


Receivers often use the services of lawyers, accountants, brokers, and other professionals to help them carry out their duties. These professionals may be paid based on hourly rates or fixed fees. However, lenders and plaintiffs need to be cautious about what these fees can mean for their receivership case and how the court will deal with these fees.

In most cases, the court must approve any fees earned by a receiver before they are paid, and the courts will reimburse the receiver for expenses incurred by him or her. In addition, the court will typically grant the parties a period (typically 5-14 days) in which they may object to any fees that the receiver may seek to pay.

Personal Receivership can be an effective solution for preserving assets and maximizing their value in the marketplace. It can also provide a receiver with an objective management perspective that can instill improvements in project management, operations, marketing and leasing, accounting and reporting that benefit the business on a long-term basis.

The court will require the receiver to file periodic reports describing his or her activities since appointment, receipts and disbursements, fees and expenses, and any other information required by the court. The receiver also needs to submit an itemized report of fees and expenses if he or she is engaged as an attorney, accountant, auctioneer or broker.

A receiver’s fees and expenses can be a significant expense to the estate, so it is important for the receiver to disclose any such costs in advance of his or her appointment. This is especially true in cases where the receiver is a part-time professional with an outside company that will manage the property.

Moreover, the fees and expenses of a receiver are generally paid from the proceeds of the property. In this regard, the court has broad discretion to determine which party should be responsible for the actual costs associated with a receivership, and it can also authorize the issuance of a secondary lien against the property to collect the receiver’s fees and expenses.

As in any civil action, a receiver must disclose all applicable fees and court costs when they are first appointed. In some cases, the court may allow the receiver to obtain a fee reduction to make up for any fees that were not properly disclosed at the outset of the matter. This is generally a more equitable remedy than denying the receiver compensation for any improperly incurred fees.

Time Commitment

Depending on your company’s circumstances, it may take some time to get the receivership off the ground. The requisite paperwork and red tape can be daunting. On the plus side, a receiver might be able to make your business more efficient and profitable. If the situation is a financial meltdown, a receiver might be able to negotiate some kind of loan modification for your company. In short, a receiver might be able to help you avoid bankruptcy. A receiver might even be able to keep you on the road by negotiating a new loan or lease with your creditors. Using the services of a top-notch receiver might be the best decision you can make for your company.


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