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A District Court May Not Enjoin Third-Party Claims Against Insurers In A Securities-Fraud Receivership Without Alternative Compensation Scheme, Justin Henderson

Bankruptcy Research Library

(Excerpt)

Within its equitable power, a district court may place the assets of a defendant into receivership and appoint a receiver to protect a plaintiff’s interest in property where the rights over that property are disputed. In general, the purpose of this equity receivership is to marshal assets, preserve value, equitably distribute to creditors, and, either reorganize, or orderly liquidate. This power is an extraordinary remedy only justified by extreme situations, such as where there is a high probability that fraudulent conduct has occurred or will occur to frustrate the claim, or when there is a threat that the disputed …