Individuals who have received notice of a business receivership in Newport Beach CA or who are considering pursuing this option often have many questions. Some of the most frequently asked questions about a business receivership in Newport Beach CA include:
What Is a Business Receivership?
A receivership is someone appointed by the court to take possession of specified assets and to complete actions related to these assets according to court instructions. The process is often used to liquidate assets.
What Does a Receivership Apply to?
Receiverships are common with corporations. They do not apply to sole proprietorships or general partnerships.
What Courts Administer Receiverships?
Both federal and state courts administer them.
Is Bankruptcy Required for a Receivership?
No. Sometimes a receivership serves as an alternative to bankruptcy. However, an adversarial proceeding such as a lawsuit is usually required for a receivership to be ordered. Additionally, the court must come to the conclusion that a receivership is the best course of action.
Why Is a Receivership Ordered?
Receiverships are often ordered when there is contention within a business, such as disputes involving shareholders, directors and officers.
What Action Can Creditors Take?
Once a creditor receives notification of a receivership, it may wish to investigate why the receivership was established and the role of the receiver. This information is typically in the order in which the receivership was ordered. The creditor should also learn about its rights to repayment as associated with the receivership.