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31 May 2021

Court-appointed receivers & statutory trustees: the reasons to appoint


3 min

Resolve the dispute…please.

Worrells is often appointed by the courts as receiver and/or statutory trustee. The motivations for those applying for these appointments can be varied and regularly complex; but they are almost always centered on two fundamental elements:

  1. Firstly, a disagreement between the stakeholders as to how assets should be realised.

  2. Secondly, what their respective entitlements are in those assets.

Whether it be business owners who bought real property together or simply in dispute, their only course of action left is to apply to court to appoint either or together a receiver (e.g. over a business such as a partnership) and/or a statutory trustee (e.g. over real property). The court order will deal with the appointee not only taking control of and realising assets, but often adjudicating on the respective interested parties’ rights to ultimately decide how the net funds should be distributed.

What is often not considered in these situations is the enormous cost involved in these appointments. The respective parties—either the one applying to court or both parties by consent—think the resulting appointee will simply realise the assets, make a determination as to the parties’ interests, and pay out the funds. But of course, it is never that simple.

Investigating and adjudicating on the respective parties’ interests can become enormously expensive when reconstructing their interests over the many years before the dispute occurred. Even assuming those interests can be accurately reconstructed, further disputes always ensue between the parties as to why one party believes they are entitled to more than the other. After all, that is why the appointment was made in the first place: because the parties could not agree.

So, why did I choose the lead into this article “Resolve the dispute…please”?

Because it’s critical to understand and appreciate that these appointments cannot resolve the dispute between the parties. And it can be fertile ground to create more dispute as the business affairs are brought into a crystal-clear light. Receivers and statutory trustee appointments are merely a means for an independent third-party to realise the assets and adjudicate on the interests. And that all takes time and money.

However, when these appointments result from parties unable to negotiate an acceptable settlement, then such an appointment is inevitable. In such circumstances, it is vital for the parties to work with the appointee to assist in their processes and adjudications as much as possible. This will not only speed up the process, but also help to keep costs to a minimum.

If you have clients in dispute or are considering one or both of these appointment types to get a final and independent decision, speak to your local Worrells partner to assess if this solution is a fit for the circumstances.

Related articles:

Using mediation to resolve stakeholder disputes

Statutory trustees: not always appointed over real property

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