Posted in: Corporate Receiverships

Corporate Receiverships

Just as the banks collapsed in the 2000’s as a result of the subprime mortgage crisis, companies and corporations can collapse for a variety of reasons. As an example, a lumber mill in Colorado was struggling economically and about to go under, but before it went under a receiver was appointed to preserve the company. In this case, the Receiver was able to negotiate new contracts and keep most of the sawmill employees employed. Eventually the saw mill was sold to a responsible owner. California courts have appointed receivers to wind-down corporations on numerous occasions, and in these situations courts have appointed receivers on their own motion to achieve judicial objectives.

The case of Gold v. Gold involved a family business started by family patriarch Morris Gold who was an extremely successful businessman. Several years later his son and son-in law became involved in the business. In 1992 the patriarch Morris passed away. Thereafter, Morris’s son and Morris’ son-in law began to disagree, and eventually Morris’s son in-law sued Morris’s son for control of the corporation. Years of litigation between the two parties ensued and eventually the court decided it was best to appoint a Receiver to dissolve the corporation. The court then decided it was appropriate for the Receiver to liquidate and sell the corporate assets.

The situations above are just two examples of how a corporation can fall apart and how a receiver can be appointed to fix the problem. As discussed above, receivers are appointed to bring order to a situation that is out of control and receivers are often called upon to do this when companies and corporations fail.