When Your Client Enters Receivership
How Small Business Owners Can Protect Their Right to Payment
If a customer enters receivership, unpaid invoices can leave a small business with urgent questions: who is managing the customer’s property, where should a claim be sent, and what deadlines apply? The answers depend on the court’s order and the type of receivership. Promptly reviewing the case information can help a creditor understand the next steps.
What receivership means
A receiver is appointed by a court to take control of some or all of a person’s or business’s property, subject to the court’s order. The receiver’s authority and the process for handling claims depend on the appointment and applicable law. A receivership is different from a bankruptcy, and a bankruptcy automatic stay does not automatically apply just because a receiver has been appointed.
First steps for a creditor
Obtain the case name, court, case number, and order appointing the receiver.
Read the order and any notice sent by the receiver. Look for instructions and deadlines.
Identify the receiver and the correct address or process for serving a claim.
Gather the contract, invoices, delivery or performance records, payment history, and communications.
Check whether your claim is secured, disputed, contingent, or subject to setoff or other defenses.
Under the Missouri Commercial Receivership Act, when it applies, claims generally must be served on the receiver within 30 days after notice, unless the court reduces or extends that period. Other receiverships may follow different rules. Follow the actual notice and court order, and seek advice promptly if a deadline is unclear.
Submitting and monitoring a claim
A proof of claim should follow the receiver’s instructions and identify the creditor, the amount claimed, the basis for the claim, and supporting records. Keep copies of everything submitted and proof of delivery. The receiver or another party may object to a claim, and the court may determine how claims are allowed and paid.
Filing a claim does not guarantee payment or a particular recovery. The amount and timing of any distribution depend on available property, liens and priorities, administrative expenses, disputed claims, and court orders. Do not assume you can continue a separate collection lawsuit or contact the debtor about payment without reviewing the order and getting legal advice.
Protect your business going forward
Clear written contracts, accurate invoicing, prompt follow-up, and organized records can make it easier to document what your business is owed. If you receive notice that a customer is in receivership, preserve relevant records and review the claim process before taking collection action.
This article provides general information, not legal advice about a specific receivership or claim. The Law Offices of Elizabeth E. Tharpe represents clients in business matters in Missouri. Contact the office to discuss whether legal guidance may be useful.
