Duties and Fiduciary Obligations of a Court-Appointed Receiver
A receiver serves the court and the property, not the party who asked for the appointment. Everything in the role follows from that single principle.
Neutrality above all
The receiver is appointed for the benefit of everyone with an interest in the property — plaintiff, defendant, lenders, tenants, and in regulated industries, the public. Communications, information access, and decisions must reflect that. Where one side is receiving analysis the other is not, the receivership has already gone wrong.
Receivers should decline appointments where a prior or present relationship with a party, counsel, lender, or competitor could create the appearance of partiality, and should disclose anything arguably material at the outset rather than after a challenge.
Duty of care in operations
- Maintain insurance continuously and at adequate limits.
- Keep tax filings and trust-fund obligations current.
- Preserve licenses, permits, and regulatory standing.
- Protect the premises, inventory, and data from loss.
- Use commercially reasonable judgment on pricing, staffing, and vendors.
- Escalate to the court before making irreversible decisions.
Loyalty and self-dealing
A receiver may not deal with the estate for personal benefit. That prohibition reaches affiliated entities, family members, and firms in which the receiver has an interest. Retaining professionals requires court approval; retaining one's own firm requires disclosure and, in most cases, express authorization with a defined rate structure.
Part 36 reinforces these limits with disclosure requirements, restrictions on appointing relatives and political-party officers, and compensation reporting designed to keep appointments free of favoritism.
Duty to account
Segregated funds, contemporaneous records, monthly reconciliations, and periodic reports are not administrative housekeeping — they are the substance of the fiduciary obligation. A receiver who cannot document a disbursement will not be paid for it and may be surcharged for it.
The final accounting closes the loop. It should let a judge and an adverse party trace every dollar from appointment to discharge without asking a follow-up question.
Personal exposure
Receivers act with quasi-judicial immunity for acts within the scope of the order, and suits against a receiver generally require leave of the appointing court. That protection evaporates for conduct outside the order, gross negligence, or self-dealing. The bond required at qualification exists precisely to answer for that risk.
The practical safeguards are unglamorous: read the order weekly, seek instructions when facts change, document decisions when made rather than when questioned, and never move money without a paper trail.
New York Receivership Guide
What every business owner should know before seeking — or opposing — a receiver.
- The CPLR 6401 standard, in plain language
- What to put in (and keep out of) the appointment order
- What receiverships actually cost
- Alternatives courts prefer, and how to propose them
Frequently asked questions
Receivership questions are fact-specific. These answers are general information, not legal advice for your matter.
No. A receiver may receive information and proposals from any party but takes direction only from the court. Acting on one party's instructions is grounds for removal.
An undertaking filed before the receiver acts, in an amount fixed by the court under CPLR 6403, securing faithful performance. Amounts are typically set by reference to the value of assets and cash flow under management.
Only with disclosure and court approval. Many judges allow it where it reduces overall cost, with clear rate terms and separate time records for legal versus receiver work.
The court can deny or reduce compensation, surcharge the receiver for losses, remove the receiver, direct claims against the bond, and in serious cases refer the matter for disciplinary action.
Seeking a receiver, opposing one, or considering an appointment?
Part 36 approved receiver and receivership counsel for New York City and Long Island matters.