Legal Definitions - statutory receiver

A statutory receiver is an individual or entity appointed by a court or a government agency to take control of, manage, and preserve the assets of a business or organization. The "statutory" aspect means that the authority for this appointment and the receiver's specific powers and duties are clearly defined and granted by a particular law or statute. This type of receiver is typically appointed when an entity is in severe financial distress, has violated regulations, or is otherwise unable to manage its own affairs, with the primary goal often being to protect creditors, customers, or the broader public interest.

• Example 1: Failing Bank

  Scenario: A regional bank experiences severe financial difficulties due to poor investments and widespread withdrawals, leading to its imminent collapse and a risk to its depositors.

  Illustration: Under federal law (such as the Federal Deposit Insurance Act in the U.S.), the Federal Deposit Insurance Corporation (FDIC) is empowered to step in as the statutory receiver for failed banks. In this role, the FDIC takes control of the bank's assets, manages its operations, sells off assets, and ensures that insured depositors recover their funds, all according to the specific powers granted to it by statute.

• Example 2: Environmental Violation

  Scenario: A manufacturing company has repeatedly violated environmental protection laws, leading to significant pollution of a local river and surrounding land, and has failed to comply with court orders to remediate the damage.

  Illustration: A court, acting under specific environmental protection statutes, might appoint an independent environmental remediation expert as a statutory receiver for the company. This receiver would be tasked with overseeing and ensuring the cleanup of the pollution, managing the company's resources to fund the remediation, and bringing the company into compliance with environmental regulations, all as mandated by the relevant statutes.

• Example 3: Troubled Insurance Company

  Scenario: An insurance company becomes insolvent, meaning it no longer has enough assets to pay its policyholders' claims, threatening significant financial losses for thousands of individuals and businesses.

  Illustration: State insurance laws often provide for the appointment of a state insurance commissioner or a designated entity as a statutory receiver for insolvent insurance companies. The receiver's role, defined by statute, would be to take control of the company's assets, manage its claims, potentially liquidate its holdings, and distribute funds to policyholders and creditors in an orderly manner, thereby protecting the public interest and ensuring compliance with insurance regulations.