Stipulation Waiving the Final Accounting—Is it a Good Idea?

more+
less-
more+
less-

QUESTION: I have concluded my work as a receiver in a case, and the parties have requested that I enter into a stipulation with them waiving my final account and report discharging me as a receiver so they can avoid the cost and delay of my preparing a final account and report and the hearing on same. Is this a good practice?

ANSWER: Although in the past parties would sometimes enter into stipulations with a receiver to waive his or her final account and report and stipulate to the receiver’s discharge, so as to avoid the cost involved, in 2002, Rule of Court 1908 was adopted, which changed the ability of the parties to waive the receiver’s final account and report or the hearing on the final account and report. In 2004, the rule was changed again and Rule of Court 3.1184 was adopted, again allowing stipulations, but still requiring the preparation and filing of a final account and report. Even if the parties are proceeding by stipulation rather than motion, therefore, the receiver is still required to prepare: (1) a final account and report; (2) a request for discharge; and (3) a request for exoneration of the receiver’s surety. In addition, notice of the motion or the stipulation must be given to every person or entity known to the receiver to have a substantial, unsatisfied, claim that will be affected by the motion or stipulation, whether or not the person or entity is a party to the action. This is really for the receiver’s benefit since such an order insulates the receiver from later liability based on the receiver’s conduct during the receivership. Aviation Brake Systems, Ltd. v. Voorhis, 133 Cal. App. 3d 230 (1982). When preparing a final account and report, be sure to detail your activities as receiver, and your receipts and disbursements, and serve notice of the hearing on the final account and report and your request for discharge on all parties and all possible claimants to get the maximum protection. While proceeding by stipulation is now permitted, there may not be a big advantage because notice of the stipulation or motion still has to be served on all possible affected parties. An advantage of proceeding by stipulation, however, is that the receiver knows in advance that the parties to the case have stipulated that they have no objection to the final account and report and what the receiver has been paid. Another possible benefit to a stipulation is that the receiver can probably get discharged quicker than if he or she had to proceed by motion, which in some courts now, because of budget cut backs, can take five or more months.

 

Topics:  Receivership, Stipulations

Published In: Bankruptcy Updates, General Business Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ervin Cohen & Jessup LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »