Receivership and business litigation

On Behalf of | Mar 7, 2023 | Business Litigation

Business litigation and receivership may not seem like they go together. Indeed, receivership, for those unfamiliar with business litigation may seem like something solely for bankruptcy. However, in practice, Donna, Texas, receivership can be common in business litigation.

Why should you care?

Business owners should treat receivership as a four-letter word. Why? Because a receiver could take your business, its assets or both even before the litigation is done. This means that, before any liability is found, you could lose everything.

How does this happen?

In litigation where your Arlington, Texas, business or its assets are at issue, a receivership can generally be a part of the litigation. The judge need only be convinced that you pose some risk to your business, its assets or both for a receiver to be appointed. The level of proof needed is individualized to the judge, and you could lose your business, its assets or both immediately and for the duration of the receivership appeal and the underlying case for however long both take.

What can the receiver do?

The receiver’s powers are dictated by the judge and the judge’s order because the receiver works for the judge. They are empowered to safeguard the assets and the business under their charge. However, in practice, no one can run your Arlington, Texas, business as well as you can.

Litigation with the government

If you are litigating with the federal government, or if the federal government is part of the litigation, receivership will likely become part of the case at some point. This is an open policy with many federal agencies and an unpublished policy with others.

Avoiding the worst

The key is avoiding business litigation altogether and structuring your contracts and deals to avoid receivership potential, where possible. This means not entering agreements and contracts without having your Donna, Texas, attorney review or draft them ahead of time, and consulting with your Arlington, Texas, attorney about the possibility of receivership.