Chapter 9 - § 9.12 • RECEIVER MANAGEMENT

• Jurisdiction: Colorado

§ 9.12 • RECEIVER MANAGEMENT

Once a receiver takes possession of a property, the receiver's primary role is to protect, maintain, and operate that property, when such management is necessary. While in the hands of a receiver, the property and any revenue it generates is gathered into the "receivership estate." The receiver collects the funds generated by the operation of the property during the receivership and places them into a separate bank account under the receiver's name. These funds are held for the benefit of the parties, and may only be expended pursuant to the order appointing the receiver, or subsequent court orders. If the funds provided by the property are insufficient to cover the receiver's reasonable expenses, the court may ask the lender who petitioned for the receiver to advance sufficient funds. Pursuant to court order, these advances may be added to the debt, with the same priority as the debt. The court may also order a cessation of operations if a property cannot be operated without advances.

Unless otherwise provided in the appointment order, a receiver is not liable for the prior acts of the lender or borrower. A receiver is also not liable for financial obligations that predated the receiver's appointment. As a fiduciary to all interested parties, a receiver cannot favor one creditor over another and it is consequently important to delineate clear guidelines for the disposition of pre-receivership creditors in the appointment order, especially where the satisfaction of certain debts may be critical to continue certain operations. Similarly, it is also important for an appointment order to confer upon a receiver the ability to contract on behalf of the receivership estate so that the receiver may maintain those relationships necessary to effectively continue a property's operations. Creditors of the receivership estate and other parties dealing with the receiver "are charged with knowledge of his functions, and contract with him at their peril. They are presumed to know the contents of the pleadings in the action in which the receiver was appointed, and are charged with knowledge of the order which defines his powers."³¹

In managing the receivership estate, a receiver typically observes the practices and procedures discussed below.

§ 9.12.1—Monthly Reports

Courts usually require receivers to file periodic reports (often monthly) of all income received and disbursements made. These reports may include a brief narrative of any...