When courts consider a receiver
A receiver is a person appointed by a court to take possession of and manage property or a business during litigation. Courts in New York and elsewhere treat appointment as a serious step, because it removes control from the owners, and they generally want to see a concrete risk to the property itself before the dispute is resolved, not just distrust between the owners. Receivers come up in partnership and LLC disputes, in dissolution proceedings, and in cases involving real estate held by a partnership. The partnership or operating agreement may address the subject, and state law and court rules govern the procedure. A judge has wide discretion, and the request is often denied when a less drastic measure would protect the property.
Costs and practical effects
A receiver is an officer of the court, not an advocate for either side, and reports to the judge. The receiver's fees and the professionals the receiver hires are usually paid from the assets being managed, which reduces what is left for the partners. Day-to-day operations can be disrupted, and customers, lenders, and employees may react to the news. A receiver can also bring clarity, since the receiver gathers records and reports on the finances. These trade-offs should be weighed before asking for one.
Evidence and alternatives
Gather proof of the risk you are worried about, such as unexplained transfers, missed payments to lenders or taxing authorities, refusals to provide records, or signs that property is being sold or encumbered. Bank statements, partnership tax returns, and correspondence about access to information are usually central. We also look at alternatives that may achieve the same protection with less cost, including an injunction against specific transactions, a court-ordered accounting, access to books and records, or an agreed independent manager. If a receiver has been sought against you, we look at how to respond and whether offering protections voluntarily might avoid an appointment.
