Legal Definitions - judgment receiver

A judgment receiver is a neutral third party, often an individual or a professional firm, appointed by a court to take control of a debtor's assets or business operations after a legal judgment has been issued against them. The receiver's primary role is to manage, preserve, and, if necessary, liquidate these assets to satisfy the outstanding debt owed to the judgment creditor (the party who won the judgment).

This appointment typically occurs when other methods of collecting a judgment have proven difficult or insufficient, and the court determines that a receiver is necessary to ensure the judgment is paid. The judgment receiver acts under the court's supervision, with a duty to both the judgment creditor and the judgment debtor to manage the assets responsibly and fairly.

• Example 1: Business Debt Collection

  Imagine "Alpha Manufacturing Inc." wins a lawsuit against "Beta Distributors LLC" for $750,000 due to unpaid invoices. Beta Distributors has valuable inventory and equipment but is struggling financially and has been slow to pay. Alpha Manufacturing asks the court to appoint a judgment receiver.

  How it illustrates the term: The court appoints a judgment receiver who then takes control of Beta Distributors' inventory, manages its sales, and oversees the eventual sale of some equipment. The funds generated from these actions are then used by the receiver to pay down the $750,000 judgment owed to Alpha Manufacturing, ensuring the creditor receives payment despite the debtor's financial difficulties.

• Example 2: Individual with Multiple Assets

  A homeowner obtains a court judgment for $200,000 against a contractor for significant construction defects and breach of contract. The contractor owns several rental properties and a small, active construction business, but is uncooperative in disclosing his assets or making payments.

  How it illustrates the term: The homeowner petitions the court to appoint a judgment receiver. The receiver investigates the contractor's assets, takes control of the rental properties (collecting rent and managing maintenance), and may even oversee the sale of one or more properties or parts of the business to generate the funds needed to satisfy the $200,000 judgment for the homeowner.

• Example 3: Complex Corporate Structure

  A bank obtains a multi-million dollar judgment against a holding company whose owner has been transferring assets between various subsidiary corporations and personal accounts to avoid payment. The holding company itself is still operating, but its finances are highly intertwined with the owner's other entities.

  How it illustrates the term: A judgment receiver is appointed by the court. The receiver's role is to untangle the complex financial web, identify assets that may have been fraudulently transferred, take control of the holding company's finances, and manage its operations or sell off parts of the business to generate the necessary funds to satisfy the bank's judgment. This ensures that even in complex situations, the judgment creditor has a mechanism to collect what they are owed.