Knowing When to Walk Away
As the Kentucky General Assembly passed the midpoint in its session, a bill was introduced to overhaul the procedures in commercial receivership (Senate Bill 149). A receiver is a person appointed by a court to take possession of the real property to receive rents and to care for the property. It is appointed to preserve and avoid waste of property that is the subject of litigation, such as foreclosure (which can take six months or more in Kentucky, even in the best case), or in the context of dissolution or liquidation of a corporation or other legal entity. Currently, the process in Kentucky is governed by a single statute, and so a lot of things are left to the discretion of individual judges and receivers, and to caselaw that is decades old. The National Conference of Commissioners of Uniform State Laws approved the Uniform Commercial Real Estate Receivership Act in late 2015 and recommended adoption in all the states. Kentucky would be the first state to adopt it, and the proposed bill would replace the single page with 22 pages of definitions and provisions in an attempt to address the appointment and powers of real estate receivers in a more comprehensive and modern fashion. Also, the Commissioners recommend adoption to address the wide variation of practice and procedure among the various states.
For additional discussion of receivership cases in Kentucky (like Thompson v. BB&T, 2008-CA-1217 (Ky. Ct. App. June 12, 2009)), see this earlier post "The Two Most Important Kentucky Business Foreclosure Decisions...".