Receivership as a collection remedy

Where a debtor has an operating business but no reachable liquid assets, a receiver may be appointed to collect and apply its income.

Grounds. Available post-judgment in most states where legal remedies are inadequate — where assets are being concealed or dissipated, where the debtor’s property produces income, or where the property requires management to preserve value.

Powers. Defined by the order: to take possession, to operate, to collect receivables, to sell property with court approval, and to investigate transfers.

Advantages over garnishment. Continuous rather than episodic; reaches income as it is generated; and the receiver’s investigative powers frequently uncover transfers.

Costs paid from the receivership property with priority, which is the principal argument against appointment where the assets are modest.

Charging orders for interests in partnerships and limited liability companies, which in many states are the exclusive remedy and produce distributions rather than control.

Turnover orders as a lighter alternative, directing the debtor to deliver specific property, enforced by contempt.

Practical assessment. Receivership is appropriate where the business has real value and the debtor is uncooperative. Where the business is the debtor’s livelihood, the threat frequently produces a payment arrangement.