October 20, 2020

Receiverships in Another State

Section 33-2622 is a significant provision that will aid receivers appointed in another state where property relating to that proceeding is located in Arizona.   It allows an Arizona court to appoint the foreign receiver or his nominee as an “ancillary receiver” as to property in Arizona if she is eligible to be a receiver, pursuant to A.R.S. §33-2606, and the appointment of that person will assist her in performing her duties and exercising her powers in that other proceeding.   As a general matter, an “ancillary receiver” will have powers, obligations and rights of a receiver appointed under the Act.  Section 33-2622(A) & (C).  

The Act also explicitly authorizes a court to issue any order which “gives effect to an order entered in another state appointing or directing a receiver.”  As a result, a court in Arizona may issue an order allowing a foreign receiver to seize and sell property located here or do any other lawful act which aids him in the performance of his duties as a receiver in the other state.

If receivership property in an Arizona case is located in a different state, the person who obtained the appointment or the receiver should promptly determine whether that state has adopted UCRERA.   If that is the case, it will be relatively easy for either of them to obtain control over that property by the appointment of an ancillary receiver under the analog to Section 33-2622 in that state.  The time, expense and uncertainties of administering receivership property in several states will be substantially reduced if it is a UCRERA state.  Lenders to borrowers with assets in multiple states should see this provision as a substantial benefit.   If the other state has not adopted UCRERA, the lender in the Arizona case or the Arizona receiver will have to initiate an action under the statutory provisions or common law in that jurisdiction to protect and obtain control of property in that locality.  

It is unclear if a court in Arizona could appoint an ancillary receiver with respect to property in Arizona owned by an affiliate of the person that is the subject of the receivership proceeding in the other state even if the affiliate is also a borrower from the lender who obtained the foreign receivership.  The Arizona judge very well may consider whether the moving party is able to satisfy the requirements for appointing a receiver under Section 33-2605.

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