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Business litigation could empower a judge to take your business

On Behalf of | Sep 23, 2022 | Business Law |

Business litigation is scary. That is just a fact. But, one thing that makes business litigation truly scary for business owners is receivership. Though, many Staten Island, New York, business owners have never heard the term or know what it means to their business.


A receivership occurs when a judge appoints a receiver. And, depending on the type of receivership or the beliefs of the judge, that receiver can then legally take control of your business and its assets.


The receiver is a neutral, third-party appointed by the New York judge through an Order Appointing Receiver, and this can be in both state and federal litigation. The receiver is an extension of the court and works on the court’s behalf.

Why are they appointed?

Courts appoint a receiver when the judge believes the business and its assets need to be preserved or maintained, and that the current business owner will misuse, squander or in some way commit waste.

What are their duties?

Their duties are specifically outlined in the Order Appointing Receiver. But, they include the maintenance of the assets, running the business and everything that entails. They become the neutral fiduciary of that business and its assets.

What types of litigation should I worry about?

Any litigation that involves the federal government will likely, at least, litigate the need for a receivership. Indeed, federal agencies, like the SEC, are explicit about this policy. Though, any litigation that involves an ownership interest in the business or a significant amount of its assets could lead to a receivership request.

This is why New York business owners should work with an attorney on their business dealings and formation. They can help ensure that you avoid litigation because as the old Benjamin Franklin saying goes, “an ounce of prevention is worth a pound of cure.”