Once you receive your notice that you are being sued, take it seriously. Business litigation can result in not just the loss of capital and business assets but also the entire business entity itself. Even if you have not lost the lawsuit, you could be deprived of control and ownership of your business and its assets during the trial itself.
How could I lose control?
Through the judicial process known as receivership, a court can appoint an independent and third-party receiver to take legal possession of both your business entity itself and all of those assets. If you live disbursement to disbursement and need business assets for your day-to-day living, receivership could devastate your life. However, even if not, the life of your business could still hang in the balance as your trained hands will no longer steer your business.
How does it happen here?
For business owners in Lexington and Louisville, Kentucky, state courts can appoint receivers. Specifically, any party suing you and your business can ask for the appointment of a receiver. To do so, they must show that they have (or probably have) a right to your business or its assets. They must also show that your business or its assets are in danger of being lost, materially injured or will disappear.
The judicial process
If the court believes these filings, it can appoint a receiver or master commissioner during the trial. And, even if the judge finds that a receiver is not warranted, that decision can be appealed. This means that you may face multiple levels of litigation on this issue alone.
The receiver or master commissioner’s powers
The powers of the receiver or master commissioner are outlined in the receivership appointment order. This includes the legal right to take possession of the entity and its assets, in addition to bringing actions for and defending actions against that entity and its assets. They will also collect all rents and debts.
For Lexington and Louisville, Kentucky, business owners, receiverships are not just a threat in state courts. Receivers can be appointed in federal litigation as well, and if you are facing litigation where a United States federal agency is a litigant, it is likely they will file for a receiver. This is why it is imperative to work with an attorney who is familiar with business commercial law.