Our post last month titled Of Whiskey and Martha’s Vineyard Realty: Federal Receivership Ordered for Fast Growing Uncle Nearest Brand discussed a federal court’s decision to grant a lender’s motion for the appointment of a receiver for its borrower. Set forth below are: (i) brief updates on developments in the Uncle Nearest case; and (ii) discussion of a recently issued Third Circuit decision in the completely unrelated matter of Whittaker Clark & Daniels Inc. dealing with the power of a corporate board to commence bankruptcy after the appointment of a state court ... Continue Reading
Companies facing financial difficulties often utilize Chapter 11 to help effectuate a restructuring or sale as part of a case filed in the United States Bankruptcy Court. In other instances, a company’s lender – impatient with a company’s efforts to respond to financial challenges – may apply to a United States District Court for appointment of a federal receiver for the company.
The appointment of a federal receiver is an extraordinary remedy allowed only after a judicial finding that such a step is clearly necessary to protect a lender’s interest in its collateral. Continue Reading