Fending Off the Appointment of a Receiver

Posted on July 8th, 2013

Joshua S. Bauchner, Esq. recently published an article in the July 1, 2013 edition of the New Jersey Law Journal entitled “Fending off the Appointment of a Receiver.”  In today’s stressful economic climate, commercial property owners often are the victims of their tenant’s problems.  While a national tenant may file for bankruptcy with the expectation of reorganizing under Chapter 11 of the Bankruptcy Code, the landlord is left having to service the mortgage without cash-flow from that tenant or any ability to commence an eviction or related action as a result of the automatic stay.  11 U.S.C. § 362.  Sooner or later (likely sooner) the Landlord’s bank will come calling in the form of a foreclosure action.

While the defaults under the mortgage present their own challenges (the rapid accrual of default interest, late fees, and attorneys’ fees and costs), the likely first step in the foreclosure action will be a Motion to Appoint a Receiver; indeed, this requested relief often is sought contemporaneously with the filing of the foreclosure complaint.  The motion will seek the appointment of a receiver simply to collect rents or, more often these days, to take full managerial and operational control over the property divesting the Landlord of all its rights and interests (though not, title, as of yet).  This article details some defenses the Borrower (née Landlord) can assert to ward off the appointment.  For full article click here

This article was originally published in the July 1, 2013 issue of the New Jersey Law Journal.