The receiver can be faced with a multitude of conflicting interests. Often he will be able to reach a weighing of interests relatively quickly and without many problems, but sometimes he has to balance on a thin bankruptcy tightrope. In doing so the law offers him hardly any support and neither does case law due to it being strongly case-based, although there is the reassuring fact that from a liability point of view many of his decisions should ‘only’ be able to bear a limited review.
However, the receiver personally being faced with a conflict of interest, which does not become acceptable by providing disclosure, must resign his office or be forced to do so. In addition, even the semblance that the winding up of a bankruptcy is being unnecessarily delayed by the receiver’s self-interest must be avoided. This can be done by the receiver accounting in his periodical report for the speed of the winding-up, which might possibly also result in unnecessary delay being actually prevented. In appointing a receiver the Court must give preference to receivers who are not only qualified but who also work quickly and efficiently.
Finally it merits consideration to submit receivers, regardless of whether they are originally advocates, accountants, tax consultants or something else, to their own disciplinary law. Apart from the useful role that behavioral standards can fulfill, disciplinary law provides a low-threshold, efficient and quick way for the interested parties in a bankruptcy to have their grievances reviewed.
Attorney (Lawyer) / Partner
(1 February 2013)