Business litigation scares even the savviest businesses owners. Why? Because, quite literally, business owners could lose their business, either through bankruptcy due to an extremely large judgment or through receivership. And, what some business owners may not know about business litigation is that you could lose your New York, New York, business long before the judge makes a judgment.
Receivers in the New York Courts
Receivership in the New York Courts is governed by New York’s Civil Practice Law and Rules, Sections 5106 and 6401. In those Sections, courts are empowered to take legal possession of business assets, if they are the subject of the litigation. They can also empower the receiver to dispose of that business property.
However, at any point, if the court believes that your business or its assets will be destroyed or materially injured by you, they can also appoint a receiver to maintain your business and its assets. They would retain ownership until there is a final judgment in the litigation, but the courts could keep the receivership in place, if the facts justify such an extension.
Is it just a state court issue?
No. Receiverships are available in business litigation in New York and federal courts. Even worse, if one of the parties to the lawsuit is a federal entity, they will likely ask the judge for a receivership or concur with another litigant’s request for one. Agencies, like the U.S. Securities and Exchange Commission, make this commonality explicit.
Prevention is better than cure
If you find yourself in New York, New York, business litigation, make sure you take it seriously and get your attorney quickly. Receiverships may become an issue, and you need to be prepared, along with whatever else is at issue in the litigation itself. Nonetheless, remember that prevention is better than cure. Have your attorney looking through your business operations to ensure that you mitigate as much risk of business litigation as possible.