Chapter 9 - § 9.8 • TURNOVER OF PROPERTY BY A CUSTODIAN OR RECEIVER

• Jurisdiction: Colorado

§ 9.8 • TURNOVER OF PROPERTY BY A CUSTODIAN OR RECEIVER

11 U.S.C. § 543(b) requires a custodian, including a receiver, to turn over any of the debtor's property in the custodian's possession when the custodian receives notice of the commencement of the case. 11 U.S.C. § 543(d)(1), however, provides that, after notice and hearing, the bankruptcy court may excuse compliance with subsection (b), "if the interests of creditors and, if the debtor is not insolvent, of equity security holders would be better served by permitting a custodian to continue in possession, custody, or control of such property."

In determining whether to excuse turnover, a court considers several factors, including (1) whether there is sufficient income to fund a successful reorganization, (2) whether the debtor will use the turnover property for the benefit of the creditors, (3) whether there has been mismanagement by the debtor, (4) whether there are avoidance issues...