What is the Process for a Court to Appoint a Receiver for an LLC?
In any action where a party has asserted a claim to dissolve an LLC, the court has the authority to appoint a receiver to wind up or liquidate the LLC. In order to appoint a receiver, the court must first hold a hearing after providing notice to all parties and interested persons designated by the court. If the court appoints a receiver after such hearing, the court retains exclusive jurisdiction over the LLC and its property. The court also may require the receiver to post a receiver’s bond in an amount set by the court. § 605.0704(1), (2), Fla. Stat.
In appointing a receiver for the LLC, the court must describe the receiver’s powers and duties in its order. These powers include:
- The receiver’s power to dispose of some or all of the LLC’s assets at a public or private sale;
- The receiver’s power to sue or defend the LLC in all Florida courts of this state; and
- The receiver’s powers to act in place of the LLC’s managers or members to manage the activities and affairs of the LLC.
§ 605.0704(3), Fla. Stat.
Once appointed, the court retains the power to order that the receiver be compensated out of the LLC’s assets or the proceeds from the sale of such assets. Likewise, the court may order expense disbursements and reimbursements to the receiver from the LLC’s assets. § 605.0704(5), Fla. Stat.
In sum, the court has broad authority to appoint a receiver over an LLC in an action for judicial dissolution of the LLC. Once appointed, the receiver has broad powers to sell or dispose of assets, to sue for and defend the LLC in litigation, and to act in place of management. The receiver also is entitled to compensation and reimbursement out of the LLC’s assets.