Commercial receiverships have surged in popularity in recent years as a flexible, court-supervised alternative to bankruptcy. Much attention is paid to the beginning and middle of a receivership case, how the receiver is appointed, how assets are protected, and how claims are administered. However, the end of the process is equally crucial.

Receiverships don’t automatically end when the assets are sold. Finalizing a receivership involves multiple legal and administrative steps. Without a clean conclusion, the receiver and the court can face unnecessary risks and complications.

“Begin with the end in mind. It’s so important to really plan, and part of that planning entails having an order that encompasses what the receivers’ goals and responsibilities are,” notes Cheryl Kelly of Thompson Coburn LLP.

While receiverships are available at both the state and federal levels, this article concerns state court commercial receiverships.

Understanding Receiver Immunity

In most cases, a court-appointed receiver enjoys quasi-judicial immunity for decisions made in the course of their duties. Receiver immunity applies so long as those actions are taken in good faith and within the bounds of the court’s order.

This immunity allows the receiver to act without fear of personal liability while executing court-mandated responsibilities. However, it is not absolute. Courts have ruled that actions taken outside the scope of the appointment, or those involving gross negligence or willful misconduct, may fall outside immunity protection.

That’s why precision in court orders matters. If the receiver’s duties are clearly outlined, and the receiver adheres to them, the risk of personal exposure is reduced significantly.

Receivers and their attorneys are advised to request immunity language in the original appointment order and again in the discharge order, and to make sure all actions remain within the scope of the court’s authority.

Protect Yourself With Insurance

Receivers should ensure they obtain adequate coverage for property and liability insurance as soon as they are appointed. If hiring third parties, then errors and omissions (E&O) insurance is also necessary. This step is critical in reducing personal and professional risk, particularly in large or complex cases.

Insurance considerations begin at appointment. Receivers should review existing property and liability policies to determine if coverage applies to them as fiduciaries. In some cases, separate receivership insurance may be needed.

Documenting these insurance reviews and maintaining correspondence with brokers or insurers can also help demonstrate good faith and diligence.

The Wind-Down Budget

The wind-down stage often involves numerous coordinated steps like terminating contracts and finalizing accounting, marketing, and selling of assets.

Jillian Cole of Taft explains that a properly done wind-down budget can minimize surprises at the end. Transparency is key here. Early communication of what the wind-down costs will look like, even if they exceed what the plaintiff or defendant thought they would be, is better than leaving it as a surprise on the final days of the hearing.

The Final Court Report

Before discharge, the receiver must provide a final report to the court. This document includes:

• A narrative summary of the case.
• A final accounting of receipts and disbursements.
• Explanation of any remaining liabilities.
• A request for approval and discharge.

This report functions much like the final tax return of a decedent’s estate: it’s the last official word on what happened under the receiver’s watch.

Courts take these reports seriously. A well-drafted final report can reduce the chance of post-discharge motions or legal action. It’s also a chance for transparency with stakeholders (creditors, owners, regulators) who want to see how the case unfolded.

Leaving Behind Leftover Assets

Not all receivership estates tie up neatly. For instance, there may be inventory with no market value, a warehouse lease the receiver doesn’t want, and IP or litigation rights with uncertain value. In these cases, the receiver can seek abandonment authority from the court. This means the receiver asks permission to leave behind or relinquish worthless or burdensome property.

“When in doubt, ask the judge,” advises Matthew Brash of Newpoint Advisors Corporation. “Who ultimately gets control of these assets is something for the court to determine, and the parties to argue over.”

Discharge Orders

The final order in a receivership is the ‘discharge order.’ This document formally ends the receiver’s responsibilities and dissolves the estate.

A discharge order will include:

• Approval of the final report and accounting.
• Termination of the receiver’s authority.
• An explicit release of liability for actions taken in good faith.
• Language preserving immunity for decisions made during the case.

Crucially, notice must be given to all parties, to ensure that everyone has the opportunity to raise their hand and confirm if the motion should go forward.

Final Disputes and Objections

Even with solid planning, objections to final reports, fee applications, or asset distribution can still arise. The key is early communication and transparency.

Sometimes parties object because they feel they weren’t heard during the receivership. By involving stakeholders in status updates and providing draft versions of key motions before filing, receivers can head off concerns before they reach the courtroom.

Courts may allow parties to take a bifurcated approach, where issues are resolved separately from discharge. This gives time to settle any objections while releasing the receiver from active duty. That structure can help diffuse tension and keep cases moving forward.

Practical Tips for Smooth Closures

Ending a commercial receivership isn’t just a formality. It’s a legally and financially sensitive moment that requires precision, professionalism, and planning. Whether you’re a receiver, attorney, creditor, or stakeholder, make sure your case concludes with a clear court order, settled accounts, and well-documented closure. The steps taken in the final stage can protect the receiver and give closure to everyone involved.

To learn more about this topic view How to Conclude a Commercial Receivership. The quoted remarks referenced in this article were made either during this webinar or shortly thereafter during post-webinar interviews with the panelists. Readers may also be interested to read other articles about state court receiverships.

This article was originally published here.

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