Court appointed receivers are a powerful tool for advisers to use to protect their client's interests in assets, wherever they are in the world. Hannah Davie looks at why court appointed receivers are an essential tactic when dealing with litigation and enforcement.
On 18 January 2021, the Royal Court of Jersey appointed Grant Thornton Channel Islands as receivers in the ongoing Crociani inheritance dispute. The court established that Grant Thornton had the power to realise assets, in addition to the usual powers of investigating, securing and protecting them.
The high-profile dispute between the two daughters of film star Edoarda Crociani over their mother's fortune and art collection is a gossip columnist's dream, but this is also a remarkable case.
In this long-running, landmark dispute, the Channel Isle of Jersey now joins the United Kingdom and other common-law jurisdictions in entrusting court appointed receivers to, not only preserve and protect international assets, but also to realise them.
When disputes arise over the ownership and distribution of assets held in complex offshore structures around the globe, it is vital that they can be secured until the dispute is resolved, then realised and distributed appropriately. Hence, a receiver is incredibly powerful.
Of the resources available in an adviser's toolkit, I would compare court appointed receivers to a power drill. When you need to drive an issue forward to resolution, it is receivers who have the power to get the results you need. Below, I outline three of the main reasons why a court appointed receiver should be an essential part of the adviser's tool kit:
1 A court appointed receiver is a flexible, versatile option
Power drills usually have a range of attachments that make the tool useful for a variety of jobs. Here, court appointed receivers are just the same. As their appointment is discretionary, there are no rigid rules. Moreover, the receiver's powers can also be tailored to the specific circumstances of each case and can be extended or altered later on, if found to be insufficient.
Court appointed receivers can also be appointed to hold shares in various companies, changing directors to protect assets, or to take possession of valuable artwork, boats and planes. Whatever the asset, a receiver can be appointed to protect it in whichever way is deemed necessary.
2 Receivers give you the power to drive a case to resolution
It is in the name - 'power' drill. Court appointed receivers are empowered as independent officers of the court, meaning that any interference in their work counts as contempt.
Court appointed receivers are more powerful than the less invasive, but more commonly known, freezing order. In certain circumstances, such an order might not provide the requisite level of protection against the dissipation of assets needed compared to a court appointed receiver. Although, the two obviously work well in tandem when you need to secure and realise assets.
Additionally, a receiver may be appointed in situations where other methods of enforcement are not possible or have been unsuccessful, such as the enforcement of a judgment by way of equitable execution.
In 2008, in Munib Masri versus Consolidated Contractors International & Anor,  EWCA Civ 303, the England and Wales Court of Appeal unanimously held that there was no reason why the court should not exercise its power to appoint a receiver by way of equitable execution in relation to foreign debts over future receipts from a defined asset. This is important because it distinguishes receivership orders from third-party debt orders, which are limited to recovery of debts in England.
3 Receivers are often specialists in insolvency
There are some walls that you cannot put a hole in by hand and require a special drill that has the power you need for the job.
Similarly, the court may appoint any such person it sees fit to act as receiver. However, using an insolvency practitioner has real strategic benefits because they possess the investigatory and forensic skills needed to trace assets and are experienced in asset realisation, recovery and distribution to creditors and claimants. Not least, an insolvency practitioner’s bond can be used to provide security to the court for their actions and any omissions.
Personally speaking, our work in contentious cross-border disputes also gives us the resources to work globally with the ability to identify, hold and realise assets across the world. While our experience as insolvency and asset recovery specialists gives us the expertise needed to design commercial strategies that provide the best possible solutions to benefit the client.
Court appointed receivers are being recognised as essential
January’s appointment of a receiver by the Royal Court of Jersey in Crociani is just one example of an increasing number of disputes, including deceased estates, matrimonial, shareholder and contentious trusts, that are benefitting from the efficiency of court appointed receivers when it comes to securing and preserving assets.
Further, when ownership or control of a business or asset is contested, a court appointed receiver can ‘hold the ring’ until the dispute is resolved, allowing a business to be traded or an asset to be held in the meantime. Thus, it is very encouraging to see courts globally continuing to widen their jurisdiction to appoint receivers, and it would appear there has been a distinct willingness of the English courts to assist with the enforcement of judgments using this powerful tool.
For support in resolving asset disputes, get in touch with Hannah Davie.