How does a receivership work?


No two receiverships are exactly the same. The basic structure, however, involves an independent person appointed by the Court (the Receiver), who is charged with collecting and liquidating assets of the Defendants and Relief Defendants. The receiver sends claim forms to each creditor (including investors) and makes a recommendation to the Court about those that should be approved. After the Court has considered the claims, the Receiver submits a plan for distributing the funds that he has collected. In almost every instance, the funds are distributed pro rata to each investor holding a valid claim. For example, if there are $1 million dollars of claims and only $100,000.00 of funds, each claimant would receive 10% of their claim.