Receiver V. Lessor: Who Gets The Equipment? Limitations On Property Under A Receiver's Control

Court appointed receivers commonly assume control over all of a debtor's property.  In assuming that control, the receiver may collect various pieces of the debtor's leased equipment, and include that equipment in a sale of the debtor's assets.  Further, the court order appointing the receiver will typically grant the receiver a priority charge over all such equipment for its fees, including the fees of its counsel, and any borrowings it may make in the course of the receivership.

Equipment lessors often object to their equipment being included in a receivership. The equipment lessors usually consider that the receivership is really for the benefit of a bank or other general security holder, and complain that their equipment should not be subject to the receiver's control or its priority charges. They argue that their remarketing expertise is better than the receiver's to liquidate their leased equipment, and that their security priority position ought to prevail