Exploring the use of receivers to enforce sizable judgments

Exploring the use of receivers to enforce sizable judgments

On Behalf of | Sep 6, 2023 | Firm News

When one business or individual owes money to another party, they may fail to follow through on their obligations for a variety of reasons. Sometimes, a debtor falls behind because of a budgetary shortfall. Other times, they may have engaged in fraud by entering into an agreement that they had no intention of honoring.

Whether due to extenuating circumstances or intentional acts, a default on funds owed may lead to litigation. Creditors can secure judgments in court that allow them to collect more aggressively on the amount owed than they could before going to court. They can potentially use that judgment to garnish someone’s wages or otherwise compel repayment. One of the tools used to enforce a judgment is the appointment of receivers.

Receivers can take control of and sell assets

A situation in which one party seeks to enforce a judgment against another by laying claim to their property could very easily become a legal nightmare. The parties might disagree about what assets or subject to liquidation or what their value is. Attempts to collect property for liquidation might even result in violence.

The courts can appoint a receiver to help eliminate some of those challenges for creditors attempting to collect on sizable judgments. A receiver has the authority to lay claim to specific assets owned by the debtor and to sell them to collect funds to repay the creditor. Receivers can potentially disassemble a business and sell off its component parts to cover the organization’s liabilities. They can also take control of property owned by individuals with sizable debts for the same purpose.

The use of a receiver can help defuse the sometimes emotional nature of such collection efforts and can reduce the likelihood of malicious misconduct, like someone selling assets for far less than they are worth as a way of punishing a debtor. Creditors can go to court in an attempt to enforce a judgment and ask to have receivers appointed to facilitate their collection efforts.

Learning more about the various tools available for creditors seeking to collect on existing debts in California may benefit those owed a sizable amount of money and struggling to force another party into financial compliance.