Receivership laws often grant state and federal courts overseeing receivership proceedings broad authority to control over a corporation’s assets and affairs. However, much like the equitable powers of bankruptcy courts, the power conferred upon a court in a receivership proceeding is not without boundaries.

The Third Circuit Court of Appeals’ recent decision in Whittaker Clark & Daniels clarifies some of these limits and raises new questions about others. Specifically, the ruling examines a court’s ability to alter the default rule that a corporation’s management retains the legal authority to file a bankruptcy petition. This article analyzes the key issues in Whittaker Clark & Daniels to help practitioners evaluate whether seeking bankruptcy protection is appropriate after the appointment of a receiver.

Read the full article written by Steve McNeill and Andrew Ehrmann published in the American Bankruptcy Institute Journal.