A business receivership in Newport Beach California occurs when a person takes possession of a particular asset or property and is responsible for following a court’s orders pertaining to the property. A business receivership in Newport Beach California may be administered through state court or federal court.
A receivership is usually only ordered when a lawsuit has been filed and the court makes the determination that one is necessary and appropriate given the circumstances of the case. The need for a receivership may arise because of a bankruptcy filing or when officers or directors are having a dispute that may involve the property directly or indirectly. However, receiverships are exclusive to businesses and do not occur with individuals.
The court provides instructions as to the duties that the receiver has, such as the duty to safeguard the property, collect rents on the property and to keep the property insured. Normally, the receiver will continue to pay debts within the ordinary course of business once they become due. Once creditors receive notice of the receivership, they may investigate as to the reason for its existence and what duties the receiver has. The property may be liquidated to pay creditors if this is in accordance with the court’s instructions.
Special rules exist regarding notification of a receivership. Legal counsel can assess the situation and determine what the appropriate steps to take are.