ARIZONA’S NEW RECEIVERSHIP STATUTE: REVIEWED, INTERPRETED AND APPLIED©, PART X

September 8, 2020

Receiver’s Powers & Duties.

A receiver may, pursuant A.R.S. §33-3611(A), do the following without a separate court order authorizing the specific act:

(1)       Manage, protect and collect receivership property;

(2)       Operate a business that is receivership property, including use, sell or lease such property, in the ordinary course of business;

(3)       Incur unsecured debt and pay expenses of the business in the ordinary course of business;

(4)       File and prosecute a cause of action or claim related to the receivership property;

(5)       Seek instructions from the court on matters relating to the receivership;

(6)       Issue subpoenas for the production of documents and the appearance of witnesses regarding receivership property or any matter that may affect “administration of the receivership”;

(7)       Hire professionals pursuant to Section 33-2614;

(8)       Apply to a court in another state for appointment as an ancillary receiver over receivership property located in that state; and

(9)       Exercise any other power granted by the court or any other applicable law.

The court may authorize the receiver to do any of the following after notice and opportunity for a hearing:

(1)       Borrow money other than in the ordinary course of business.  The comment to UCRERA §12 makes clear, citing to Clark on Receivers, that this provision

is not intended, however, to give the court a “blank check” to authorize the receiver to borrow funds and grant the lender of those funds priority over pre-existing liens on receivership property. Under the weight of existing authority, such “priming loans” are not appropriate in cases involving the operation of a private business, without the consent of the pre-existing lienholders, except as necessary to preserve the property.

UCRERA, at p. 40.   Therefore, it is questionable that a court may authorize a receiver to obtain a loan secured by a lien senior to any existing liens even if that creditor’s interest could be “adequately protected” as a debtor or trustee do in certain circumstances under Section 364(d) of the Bankruptcy Code.

(2)      Make improvements to receivership property;

(3)       Pay herself or her professionals, pursuant to A.R.S. §33-2614;

(4)       Use or sell property outside of the ordinary course of business, pursuant to Section 33-2615;

(5)       “Adopt or reject” a lease or other executory contract, pursuant to Section 33-2616

View Full Article