When Will a New York Court Appoint a Receiver?
Receivership is an extraordinary remedy. New York courts grant it when property or a business is at genuine risk of loss, waste, or dissipation and no lesser remedy will protect the parties in the meantime.
The core standard: danger of loss, waste, or dissipation
CPLR 6401(a) permits a court, on motion of a person with an apparent interest in property that is the subject of an action, to appoint a temporary receiver where there is danger that the property will be removed from the state, lost, materially injured, or destroyed. The statute is short; the case law around it is not.
Courts describe receivership as a drastic remedy and insist on a clear evidentiary showing rather than argument. Conclusory affidavits about mistrust between partners rarely succeed. Documented diversion of funds, unpaid taxes accruing penalties, insurance lapses, missed debt service, abandoned premises, or a licensee at risk of losing a regulatory license generally do.
The moving party must also show why a lesser remedy will not do the job. If a preliminary injunction, an accounting, an escrow of disputed funds, or an attachment would protect the asset, the court will usually choose it first.
The statutory pathways
The pathway matters. A rent receiver in foreclosure has narrow, rent-focused powers and often gets appointed almost as a matter of course when the mortgage contains a receivership clause. A CPLR 6401 operating receiver over a functioning restaurant, dispensary, or manufacturing business faces a much higher bar and a far more detailed order.
- CPLR 6401 — temporary receiver over property that is the subject of a pending action.
- CPLR 5228 — post-judgment receiver to collect on and manage a judgment debtor's assets.
- RPAPL 1325 — rent receiver in a mortgage foreclosure, frequently on consent under an assignment of rents clause.
- BCL 1202 and 1113 — receiver for a corporation in a judicial dissolution proceeding.
- LLC Law 703 — receiver or liquidating trustee following dissolution of a limited liability company.
- Partnership Law 69 — winding-up receiver on dissolution of a partnership.
Fact patterns that persuade courts
- One member has locked the other out of books, bank accounts, or the premises.
- Company funds are being used for personal expenses or transferred to affiliates.
- Payroll taxes, sales taxes, or trust-fund obligations are going unpaid.
- Insurance has lapsed or the property is unsecured and deteriorating.
- A regulated license — liquor, cannabis, healthcare — is exposed to suspension or revocation because no one is filing or responding.
- Deadlock has frozen ordinary decisions and the business is bleeding cash weekly.
- A judgment debtor is moving assets ahead of enforcement.
How receivership motions are defeated
Most successful oppositions do three things. They show the asset is not actually at risk: current insurance, current taxes, current debt service, audited or reconstructed financials. They offer a narrower alternative: an agreed accounting, dual bank signatures, a monitor, an escrow, or a short-fuse sale process. And they quantify the cost of receivership — fees, disruption, license and franchise consequences, vendor flight — against the harm alleged.
Timing matters as well. A movant who waited months after learning of the alleged misconduct often faces the argument that the emergency is manufactured for leverage.
The mechanics of the application
Receivership is sought by motion or order to show cause, supported by affidavits from people with personal knowledge and by documents — bank records, tax notices, default letters, inspection reports. Where the danger is immediate, applicants seek a temporary restraining order preserving the status quo until the motion is heard.
The proposed order should be drafted with precision: the scope of property, the powers granted, the bond amount, reporting intervals, the treatment of existing management, the authority to retain counsel and accountants, and the standard for compensation. Judges frequently adopt the proposed order with edits, so the party that drafts carefully shapes the receivership.
Under Part 36 of the Rules of the Chief Judge, the court — not the parties — selects the appointee from the approved list, subject to the exceptions for consent appointments in the rule. A candidate the parties both find acceptable can be proposed, but the appointment is the court's.
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.
On an order to show cause with a TRO, a court can hear a receivership application within days. A fully briefed motion on ordinary notice usually takes several weeks. Emergency relief preserving the status quo is often granted first, with appointment decided at the return date.
No. Part 36 approves attorneys and non-attorneys as receivers. Courts often prefer an attorney-receiver in matters with litigation, regulatory, or transactional complexity, and value demonstrated operating experience where the receivership will run a business.
Yes. Stipulated receiverships are common, particularly in commercial foreclosures and business divorces. The court still enters the order and Part 36 still governs the appointment and compensation.
No. A receivership is a state court remedy over specific property or a specific business, supervised by the appointing judge. Bankruptcy is a federal proceeding with an automatic stay, creditor classes, and a discharge. A bankruptcy filing can displace or affect an existing receivership.
Seeking a receiver, opposing one, or considering an appointment?
Part 36 approved receiver and receivership counsel for New York City and Long Island matters.