Legal framework for receiverships

The process where a court orders an outside party to take custodial responsibility of another’s property is called receivership.

It’s a common law process that goes back about 500 years or so; however, there is no guidance in state law regarding the practice, James Baillie, an attorney with Fredrikson & Byron, told the House Civil Law Committee Feb. 14.

On behalf of the Minnesota State Bar Association, Rep. Joe Hoppe (R-Chaska) sponsors HF382, which lays out a framework for receiverships, “so that it gets written down and it’s not a matter of lore or custom,” Baillie said.

The bill also makes limited changes to existing law by clarifying receivership requirements in an effort to provide transparency to the rules and requirements, Baillie said.

The committee approved the bill and sent it to the House Judiciary Policy and Finance Committee. It has no Senate companion.

Court-appointed receiverships can be used to protect real estate, liquidate fraudulently operated businesses; or seize assets being withheld in a divorce.