A supposedly disinterested person appointed by a state or federal non-bankruptcy court to administer a borrower’s property. Although the Code prohibits the appointment of a receiver in a bankruptcy case, Section 543 permits the court to allow a receiver appointed prepetition to remain in place during the bankruptcy case if the court finds that the interests of creditors are better served by permitting the receiver to remain in place. Because creditors have been increasingly successful in keeping receivers in place postpetition, creditors and debtors now frequently engage in a race to two courthouses—the creditor racing to a non-bankruptcy court to seek appointment of the receiver—and the debtor racing to bankruptcy court to obtain the benefits of the automatic stay before a receiver can be appointed.
Bankruptcy Code §§ 105(b), 543. See also Custodian.