Receiverships in Colorado Divorce

Protecting Your Rights & Advocating For Your Interests

When going through a divorce, a party might attempt to hide, destroy, or “waste” assets or refuse to comply with court orders. In very limited circumstances, the court may find a receiver should be appointed as a means to remedy the situation. A receivership is when the court appoints a receiver to take over the entire marital estate, including any businesses, when the assets are subject to a divorce action. While only appointed in rare special circumstances, receivers can play an important role when they are necessary.

A receiver controls the assets specified in the court order, and they answer directly to the court. While the use of receivers is rare in Colorado divorce proceedings, when they are used, they can make up a critical part of the division of property process. Receivers can be appointed to take over assets at risk of being disposed of, such as a business. They act as an arm of the court to manage the asset, which may include preserving or dissolving the asset, depending on what has been ordered.

If you are going through a divorce and think a receivership may be needed in your situation, contact the experienced Denver divorce attorneys at Halligan LLC. We understand the ins and outs of Colorado divorce law and know when receiverships are an appropriate measure to take. Call us today at (720) 608-2361 to schedule a confidential consultation. During your initial consultation, we can discuss all your options.

What is a receivership?

A receivership is a drastic remedy. The court must find compelling evidence to take control of a person’s property away from them. It’s important to remember that the court ultimately has the power to order appointment of a receiver. The same rules apply to both spouses when a receiver is appointed.

A receiver is a fiduciary who is appointed by the court to manage and preserve property when it seems likely that the divorcing couple is unlikely to appropriately do so on their own. Put another way, a receiver is an agent who acts as the temporary caretaker of property for the court. The receiver, as a neutral party representing the court, receives and preserves property that is the subject to division in a divorce. The receiver could be appointed to receive profits, rent, and other funds and apply or dispose of them when it does not seem reasonable that either party should hold them.

Let’s say, for instance, there is a dispute over which party is entitled to what share of the profits of a business, and it is likely one spouse is dissipating or hiding the profits. The receiver may oversee the business enterprise during the dispute, collect the funds, and hold onto them until the dispute is resolved.

What are a receiver’s duties?

When a receiver is appointed by the court, they are given orders that specifically spell out what they may or may not do. The receiver’s powers could be broad or more specific.

Receivers are usually not liable for the owner’s actions, nor are they authorized to pay obligations existing prior to their appointment. A receiver cannot prefer one party over another. However, the receiver may seek authorization from the court to pay debts with creditors whose continued services are critical to the operation of an on-going business concern.

Receivers can preserve, protect, and manage spousal property in divorce proceedings. They may be of particular use when one of the parties controls the business and has the ability to conceal financial information about that business for their own benefit in a divorce case. Receivers can report to the court their findings on the finances of a business. They may also be used to help speed up the sale of assets involved with a complicated property division.

Specific Court Order

Professionals who act as receivers in divorce cases have to remember that the two main purposes of their appointment are to:

  1. Prevent the dissipation of community assets.
  2. Fulfill court orders.

The receiver is expected to work with the court to structure an order that covers the basics of the appointment, including responsibilities, duties, discharge, bonding, and being paid for their services. A court order for a receiver will often include a long list of instructions and conditions, which may include the following:

  • A description of the business and any property that will be the subject of the receivership.
  • The amount of the receiver’s bond.
  • The receiver’s authorization to employ legal counsel.
  • A provision that the receiver can take possession of the business and all its assets.
  • A direction that the receiver is able to demand and collect all money due from any operations of the business, and to care for, preserve, maintain the expenses necessary for care and preservation of the business assets.
  • If necessary, the receiver may be directed to sell all assets of the business as may occur in a divorce. They may also have to operate the business to comply with other court orders, such as those involving the payment of spousal support.
  • A detailed description of the powers of the receiver, such as operating the business, collecting income and profits, and managing the books and financial records of business.
  • A schedule stating when the receiver has to file relevant documents with the court and with all parties involved.

Contact Us Today

If you have questions or concerns about the need for receivership in your Colorado divorce case, contact Halligan LLC today. One of our experienced and knowledgeable Denver family lawyers will be glad to discuss the particulars of your case and your legal options. Call now at (720) 608-2361 to schedule your confidential consultation.

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