When a business defaults on a loan, the lender has a right to request a business receivership in Newport Beach CA. A business receivership involves a legal process where a court appoints an impartial person called a receiver to take possession of specific property to prevent the deterioration, dissipation, or loss of assets. If your business is at risk of falling into business receivership in Newport Beach CA, you will definitely need the legal assistance of a local business attorney.
A business receivership is a legal remedy. Therefore, an action for receivership cannot be commenced solely to appoint a receiver without some underlying legal cause of action. Before a California court will appoint a business receiver, a proper lawsuit claiming that a substantive right has been violated must be filed with the court.
Receivers may be appointed after judgment in the following instances:
- To carry the judgment into effect. CCP § 564(3);
- To preserve property pending an appeal. CCP § 564(4);
- To aid execution of a judgment CCP § 564(4).
Typically, when a court appoints a business receiver, the receiver is an individual and not a company. After court appointment, the receiver will take legal possession of a business’ property but will not hold title. In most cases, the receiver will have a company’s mail re-routed to intercept accounts receivable payable to the business. Additionally, if a creditor’s security interest includes inventory in the receiver’s possession, that inventory may be sold with the proceeds going to pay off the business debt.