A court-appointed receiver is a neutral person a judge appoints to take custody of property or a business and manage or liquidate it under the court’s supervision. The receiver is an officer of the court, not an agent of whichever party asked for the appointment. In the District of Columbia, the Superior Court’s power to appoint one over a corporation is set out in D.C. Code § 29–312.22; in federal court, the procedure is supplied by Fed. R. Civ. P. 66.
The short definition
A receiver is a neutral appointed by a court to take control of assets or a business that is the subject of litigation, to preserve or liquidate them, and to report to the court that appointed them. The receiver’s powers come from the appointment order, not from any party.
Who appoints a receiver, and can a party choose one?
The court appoints. Parties may nominate candidates, but under D.C. Code § 29–312.22(a) the court must hold a hearing, after notifying all parties and any interested persons the court designates, before appointing a receiver or custodian. The court that makes the appointment keeps jurisdiction over the receivership.
§ 29–312.22. Receivership or custodianship. (a) Unless an election to purchase has been filed under § 29-312.24 , the Superior Court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the activities and affairs of the corporation. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has jurisdiction over the corporation and all of its property wherever located. (b) The Superior Court may appoint an individual or a domestic or foreign corporation, authorized to do business in the District, as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the cou
D.C. Code § 29–312.22 — Receivership or custodianship
What powers does a receiver have?
Whatever the appointment order gives them. That is the operative document in every receivership. Two statutory reference points matter. In D.C., § 29–312.21(b) lets the Superior Court appoint a receiver or custodian pendente lite and take action to preserve assets and carry on the business until a full hearing. In federal court, a receiver over property in more than one district is, under 28 U.S.C. § 754, “vested with complete jurisdiction and control of all such property with the right to take possession thereof” once bond is given.
A receiver appointed in any civil action or proceeding involving property, real, personal or mixed, situated in different districts shall, upon giving bond as required by the court, be vested with complete jurisdiction and control of all such property with the right to take possession thereof. He shall have capacity to sue in any district without ancillary appointment, and may be sued with respect thereto as provided in section 959 of this title . Such receiver shall, within ten days after the entry of his order of
28 U.S.C. § 754 — Receivers of property in different districts
Receiver, custodian, trustee — which is which?
| Role | Appointed by | Core task | Authority |
|---|---|---|---|
| Receiver | Superior Court or a federal court | Wind up and liquidate; or preserve assets pending litigation | D.C. Code § 29–312.22; Fed. R. Civ. P. 66; 28 U.S.C. § 754 |
| Custodian | Superior Court | Manage the activities and affairs of the corporation | D.C. Code § 29–312.22 |
| Bankruptcy trustee | U.S. Bankruptcy Court / U.S. Trustee | Administer the bankruptcy estate | Title 11, U.S. Code |
Can a receiver be sued?
Yes. Under 28 U.S.C. § 959, trustees and receivers may be sued, without leave of the appointing court, for their acts in carrying on business connected with the property. The same section requires them to manage and operate the property according to the valid laws of the state where it is situated.
Frequently asked questions
Is a receiver the same as a liquidator?
A receiver is not necessarily a liquidator. Liquidating is one task a receiver may be given. D.C. Code § 29–312.22 splits the roles: a receiver winds up and liquidates, while a custodian manages the company’s activities and affairs.
Does appointing a receiver end the lawsuit?
No. A receivership is a remedy within a case. The appointing court keeps jurisdiction, and the receiver reports to that court.
Who can serve as a receiver?
The court decides who serves. Courts commonly look for a neutral with relevant experience; in financial-misconduct cases, that often means someone who has handled fraud investigations or complex asset tracing.
Why would a court put a company under a receiver at all?
To stop the value of the business draining away while the case is still being decided. In a proceeding brought to dissolve a corporation the court can issue injunctions, appoint a receiver or custodian on an interim basis with whatever powers it directs, take other action to preserve the corporate assets wherever they are located, and carry on the business until a full hearing can be held. See D.C. Code § 29-312.21(b).
When can a receiver sell the company’s assets?
Only when the court has authorized it. A receiver may dispose of all or any part of the corporation’s assets, wherever they are located, at a public or a private sale, if the appointing court has given that authority in its order. The order defines the powers, and it can be amended as the case develops. See D.C. Code § 29-312.22(c)(1)(A).
Where can a receiver bring proceedings?
In any district, without having to be appointed again in each one. A receiver over property situated in different districts has the capacity to sue in any of them without an ancillary appointment, which is what allows a single receiver to pursue assets that have been spread around. See 28 U.S.C. § 754.
How does a receiver bring claims that belong to the company?
In their own name, as receiver, rather than in the company’s. The appointing order can empower the receiver to sue and defend in his or her own name as receiver of the corporation, which is how claims continue to be pursued when the people who ran the business are the ones being sued. See D.C. Code § 29-312.22(c)(1)(B).
Who bears the cost of the receivership?
The assets under the receiver’s control normally carry it, which means the estate pays before the owners see anything. The court also decides whether the receiver or custodian must post a bond, with or without sureties, and in what amount — a further charge that comes out of the same place. See D.C. Code § 29-312.22(b).
Sources and legal authorities
- D.C. Code § 29–312.22 — Receivership or custodianship
- D.C. Code § 29–312.21 — Procedure for judicial dissolution
- Fed. R. Civ. P. 66 — Receivers
- 28 U.S.C. § 754 — Receivers of property in different districts
- 28 U.S.C. § 959 — Trustees and receivers suable
General information about D.C. and federal law, not legal advice.
Related: Court-Appointed Receiverships · Receiverships in financial-fraud cases · Business Litigation. To discuss a matter, call (301) 901-3109 or use the contact page.