Youngstown Daily Legal News

Proposed legislation would amend, clarify power of receivers

TIFFANY L. PARKS
Special to the Legal News
Published: March 13, 2013

House Bill 9, a measure that would add to and clarify the powers of a receiver and provide a procedure for a receiver’s sale of real property, is scheduled for its third hearing today before the House Judiciary committee.

If enacted, the bill would modify state law prohibiting any party, attorney or person interested in an action from being appointed receiver except by consent of the parties. It provides that the consent be from all parties to the case and all other persons holding a recorded ownership interest in, or financial lien on, the property that is subject to the proceeding.

Appointed by the court, a receiver is charged with taking control of property that is the subject of court action. That person must manage the property during the course of the proceeding and, in some cases, sell the property under the court’s direction.

HB 9 is sponsored by Rep. Peter Stautberg, R-Cincinnati.

Judge Richard A. Frye of the Franklin County Court of Common Pleas recently testified in support of the proposed legislation.

“As we see it, HB 9 will codify the minimum scope of authority for receivers. In doing so, it will streamline and promote consistency and uniformity of the receivership process throughout the state,” he said.

In addition to outlining that a receiver could not ordinarily be someone with any financial interest in a property, Frye noted other key components of the bill, such as giving priority consideration, when choosing a receiver, to qualified individuals nominated by the party seeking receivership.

Frye said the bill states “that a receiver has the authority to sell property free and clear of liens, so that liens then simply attach to the proceeds of sale (and) that in selling property, a receiver has authority to reimburse, subject to court approval, a prospective but ultimately unsuccessful purchaser for expenses.”

“The judiciary appreciates the interest of the Ohio House of Representatives and the Ohio Senate in updating the receivership statutes, while not making them so technical or rigid that they detract from the inherently equitable nature of this remedy,” he said.

Frye said the proposed legislation has been welcomed by members of the bench.

“As I and other judges with whom I have consulted see it, this bill codifies and clarifies much existing law, and otherwise lays out a sensible template for receivership practice without imposing procedures that may be unduly expensive or unnecessary in individual cases,” Frye said.

“In my 30 years in private practice before taking the bench, the complexity of federal bankruptcy statutes and rules always appeared challenging for lawyers to understand, and expensive for debtors and creditors to use. This bill is good for Ohio precisely because it does not impose overly complex rules or procedures. In preserving flexibility for parties and trial judges, it offers the public a good alternative to federal bankruptcy court.”

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