Fall 2012 • Issue 45, page 21
Appointing a Neutral Receiver
By Davidson, Peter*
Q: I just received notice that the lender to
one of my clients is seeking to have a receiver appointed over my client’s
shopping center. I think the proposed receiver is in the lender’s pocket
and will not be neutral. The lender has used her many times and in
negotiations to restructure my client’s debt, comments were made that if
an agreement could not be reached the lender would have “it’s receiver”
take over and run the property. Is there anything I can do to prevent the
lender’s receiver from being appointed if I cannot defeat the
receivership’s motion?
A: Yes. You can propose a different receiver at the hearing.
Indeed, I am surprised defendants’ counsel don’t do this more often. When
a party moves to have a receiver appointed, it suggests (“nominates”) who
it wants the court to appoint. Who is appointed is up to the court,
because the receiver is the court’s agent. The court can appoint who the
moving party nominates, who the responding party nominates, or someone
completely different. This is specifically provided for in California
Rules of Court, Rule 3.1177 which provides: “At the hearing of an
application for appointment of a receiver on notice or at the hearing for
confirmation from an ex parte appointment, each party appearing may, at
the time of the hearing, suggest in writing one or more persons for
appointment or substitution as receiver, stating the reasons. The party’s
suggestion is without prejudice to its objection to the appointment or
confirmation of a receiver.” Therefore, if you think the proposed receiver
might not be neutral, say so and why, but also propose one or more other
choices for the court and explain why you believe they would be good
choices to act as the court’s receiver given the facts of the case.
*Peter A. Davidson is a Partner of Ervin
Cohen & Jessup LLP a Beverly Hills Law Firm. His practice includes
representing Receivers and acting as a Receiver in State and Federal
Court.
|