receivership estate just the same as a bankruptcy trustee can recover preferential transfers on behalf of the bankruptcy estate. A number of states already allow receivers and others to pursue preference claims under state law. However, while the Act states a receiver can pursue fraudulent transfer claims, it does not specifically allow a receiver to pursue preference claims. Although former RCW 23.72.030 provided any preference made by an insolvent corporation within four months before the date of application for the appointment of a receiver could be avoided, this statute was repealed in 2004. Amending the Act to incorporate a preference statute therein or enacting a separate preference statute could ultimately benefit creditors by leading to larger recoveries and distributions in receivership proceedings. Finally, the Act states actual, necessary receivership costs and expenses incurred during the administration of the estate, including allowed fees and expenses of the receiver and professional persons employed by the receiver, have priority over the secured claim of any creditor obtaining or consenting to the appointment of the receiver. Some receivers have used this provision to sell” secured parties’ collateral over their “short objection in order to pay for the receivers’ expenses, costs, attorneys’ fees, and other administrative expenses. Presumably, secured creditors can protect themselves at least to some extent by negotiating an agreement with the receiver at the outset of the case to the effect that despite the verbiage of the Act, the parties agree the secured creditors reserve their right to object to the compensation requested by the receiver and its professionals even if the creditors have obtained or consented to the appointment of the receiver. Nevertheless, amending the Act to prevent receivers from potentially having what appears to be when it comes to disposing of encumbered collateral in carte blanche order to pay administrative expenses seems like a good idea.
receivership estate just the same as a bankruptcy trustee can recover preferential transfers on behalf of the bankruptcy estate. A number of states already allow receivers and others to pursue preference claims under state law. However, while the Act states a receiver can pursue fraudulent transfer claims, it does not specifically allow a receiver to pursue preference claims. Although former RCW 23.72.030 provided any preference made by an insolvent corporation within four months before the date of application for the appointment of a receiver could be avoided, this statute was repealed in 2004. Amending the Act to incorporate a preference statute therein or enacting a separate preference statute could ultimately benefit creditors by leading to larger recoveries and distributions in receivership proceedings. Finally, the Act states actual, necessary receivership costs and expenses incurred during the administration of the estate, including allowed fees and expenses of the receiver and professional persons employed by the receiver, have priority over the secured claim of any creditor obtaining or consenting to the appointment of the receiver. Some receivers have used this provision to “short sell” secured parties’ collateral over their objection in order to pay for the receivers’ expenses, costs, attorneys’ fees, and other administrative expenses. Presumably, secured creditors can protect themselves at least to some extent by negotiating an agreement with the receiver at the outset of the case to the effect that despite the verbiage of the Act, the parties agree the secured creditors reserve their right to object to the compensation requested by the receiver and its professionals even if the creditors have obtained or consented to the appointment of the receiver. Nevertheless, amending the Act to prevent receivers from potentially having what appears to be carte blanche when it comes to disposing of encumbered collateral in order to pay administrative expenses seems like a good idea.
Receivership%20Act%20Article.docx