Minnesota Stat. Section 502.76, et seq. - Asking for receiverships and satisfying the subjective burden of proof.

A judicially appointed receiver is an efficient remedy afforded creditors under Minnesota Law.  Under Minnesota’s statutory receivership law, Minn. Stat. § 502.76, et. seq., a creditor’s objective legal entitlement to the appointment of a limited or general receiver is straight-forward and easily adjudged by the court in a motion seeking that remedy.  However, Minnesota Courts have imposed on the movant the additional subjective burden of establishing that it is also appropriate for the Court to grant the receivership remedy.

Specifically, Courts have held that the appropriateness of appointing a receiver is a critical question, because a judgment creditor is not entitled to appointment of a receiver by right.  Rather, appointment of a receiver is “a matter resting in the sound discretion of the court, and dependent somewhat upon the peculiar circumstances of each particular case.” Poppitz v. Rognes, 76 Minn. 109, 78 N.W. 964, 964 (1899); see also Wilkins v. Corey, 168 Minn. 102, 209 N.W. 754, 755 (1926); Minnesota Hotel Co., Inc. v. ROSA Development Co., 495 N.W.2d 888, 893(Minn. App. 1993) [“The trial court has the discretion in receivership proceedings to do what is best for all concerned.”].

A court therefore may require the movant to address several practical issues, such as  whether the receivership is necessary for satisfaction of movant’s debt or judgment, either because debtor has other assets that may be used to satisfy the debt/ judgment, or because the movant could obtain this property without a receiver.  See Healy-Owen-Hartzell Co. v. Montevideo F. & M. E. Co., 170 Minn. 290, 212 N.W. 455 (1927) (noting that because “[r]eceiverships are expensive and often wasteful,” they “are to be avoided rather than invited,” especially if the same property could be reached by lien or execution); Poppitz, supra, 78 N.W. at 964 [stating that “it is against the general policy of the law” to permit a creditor to appoint a receiver if there is ample unencumbered property available to satisfy the judgment without appointing a receiver].

Accordingly, a court can require sufficient evidence that no other assets are available to pay a debt/judgment, that the debtor has failed to make any payment on the debt/judgment from such other available assets and that the movant has no other adequate legal remedies available in order to grant a requested appointment of a receiver.  In short, before bringing a motion seeking the judicial appointment of a receiver be prepared to establish not only that the court can appoint the requested receiver, but also that the Court should appoint the requested receiver.   

By Steve Hetland

Leighton Hetland PLLP

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