Business litigation is always complicated, regardless of the topic. But, the worst-case scenario is, usually, thought to be a large monetary penalty. Business owners rarely believe that business litigation could result in the loss of their business, even if temporary.
Lose the business?
Yes. In some cases, if your Washington business or business assets are at stake, if the judge believes that you will improperly dispose of assets or run the business into the ground, the judge could order a receiver. A receiver could then legally take over your business and your business assets for the entirety of the litigation.
What does the receiver do?
The receiver is an extension of the court. They work at their request, under their direction (through the Order Appointing Receiver) and until the litigation has concluded. Their job is to maintain the business and the business’s assets in good condition and ensure its reasonable maintenance.
Are these just federal cases?
No. Receiverships occur at both the federal and state level, including here, in Washington state. However, if your litigation involves the federal government (DOJ, SEC, etc.), then a receivership will likely be a part of the case eventually. This is because, some federal agencies, have an explicit and public policy of requesting a receiver.
Take it as a reason to take it seriously
For our business owner readers, the main takeaway is that businesses litigation is serious business that does not just involve monetary payouts. This is not something that you can insure over either. After all, even if you have insurance that covers you for this loss, you still lose your business.