"Receivership is an equitable remedy allowing a
court to oversee the orderly management and disposition of property
subject to a lawsuit. Although the remedy is not new, there is no standard
set of receivership rules and the courts of different states have applied
widely varying standards. This Uniform Commercial Real Estate Receivership
Act [Receivership Act] applies to receiverships involving commercial real
estate, and provides a standard set of rules for courts to apply. It will
result in greater predictability for litigants, lenders, and other parties
doing business with a company subject to receivership."
Uniform Law Commission (ULC). The complete
Commercial Real Estate Receivership Act can be viewed at
The ULC, also known as the National Conference of
Commissioners on Uniform State Laws, which was established in 1892,
recites its mission as providing "states with non-partisan, well-conceived
and well-drafted legislation that brings clarity and stability to critical
areas of state statutory law."In the realm of commercial real estate
receiverships, the ULC has recently done just that.
The ULC members and commissioners, consisting of
practicing lawyers, judges, legislators and legislative staff and law
professors, worked hard on the Receivership Act, but invited individuals
with special expertise – whom they called "Observers"- to participate in
the ULC committee meetings on commercial real estate receiverships (the
"Committee”). The authors of this article were the three Observers sent by
the California Receivers Forum ("CRF”) to provide practical, experienced
business recommendations to the Committee during the drafting process of
the Receivership Act. Here is their story.
The Observers’ Perspective
We are happy to say that many of the items stated within the final Act
were recommended by us either in writing or verbally at the meetings,
adopted in concept by the Committee and drafted into law.
We traveled to Salt Lake City, Minneapolis, Chicago and Washington, DC to
participate in the round table discussions with the cast of markedly
different and opinionated legal professionals to discuss, debate and fight
to form a consensus on what should be the foundation for a uniform
Receivership Act for all State legislatures to consider adopting. The
opinions and comments presented during these two day (all day) long
meetings ranged from fascinating to brilliant to mind-blowingly naïve on
all receivership matters. Hailing from California and flying the CRF flag,
we, rightly or wrongly, felt that we had more knowledge and experience in
receiverships than the rest of the group. In case you wondered, we did not
keep our opinions to ourselves. They will certainly all remember our
spirit and contributions. In the end, we are all proud of our work on this
historic draft Receivership Act.
We believe that our contribution was important because California has more
receiverships than any other state in the USA. We were appointed to serve
as "Observers"on the Committee by CRF. The Committee members have a good
deal of respect for our association as it is the largest one in the
country serving the receivership community through the education of its
The Impact of Special Interests
The process of drafting the Receivership Act was monitored by the chair of
the Committee and the Recorder in charge of the drafting. Both people had
substantial respect, skill and patience with the Committee members who at
times labored on about the special interests of the parties in their
state. The drafting process led to interesting provisions in the Act,
Will it Be Adopted?
When drafting of an act is completed, each commissioner must work to
advocate the acceptance of the act in their state. They will meet with
resistance to change, but the result can be "workable modern state law
that helps keep the federal system alive"in the courts. The Observers
understand that once an Act has been fully debated over a period of time
by the Committee, and subsequently approved by the Commission, the
probability of success in regards to acceptance in State legislatures
nationwide of that Uniform Act is very high, with little room for the
individual States legislatures to modify the language and still have it
As the ULC website states: "The work of the ULC
simplifies the legal life of businesses and individuals by providing rules
and procedures that are consistent from state to state. Representing both
state government and the legal profession, it has sought to bring
uniformity to the divergent legal traditions of more than 50 sovereign
jurisdictions, and has done so with significant success."
The Observers to the Receivership Act are proud to
have been a part of the process of drafting the Act and hope it benefits
the receivership community throughout the USA.
*Beverly N. McFarland
is a an RN Associate Publisher, a chapter 11 trustee
and receiver and CEO of The BeverlyGroup, Inc., an asset management
company that has successfully resolved in excess of $8 billion dollars of
estimated assets since 1983. Ms. McFarland is a former chair and current
member of the California Receivers Forum BOD, the Turnaround Managers
Association BOD and has enjoyed presenting at the Loyola Law School
seminars through the years as well as many other associations on
receiverships and chapter 11 bankruptcy matters.
*Gordon Dunfee, Law Office of Gordon
Dunfee, is amember of the CRF San Diego Board of Directors and the Acting
President of the California Receivers Forum State Board of Directors. He
is a receiver and counsel to receivers.
*Richard Weissman serves full time as a
receiver, partition referee, Provisional Director and Special Master for
the State and Federal Courts.