A Receivership Bond is a type of judicial fiduciary surety bond. The bond may be required of a court appointed receiver charged with managing or liquidating a business in financial distress. The appointed receiver is put in charge of the disposal or management of the businesses assets within the authority and direction given by the court. In the case of bankruptcy, the bankruptcy receiver is put in charge of holding the business assets until a Trustee is put in place. Typically, the bond must be in place before the receiver can proceed with the fiduciary duties.
Receivership bonds are usually annually renewable. The bond is typically required by the court until the receiver’s duties are completed. This timeframe varies with each bond. At time of renewal, if the bond is still required, the bond can typically renew for a new annual term.
The bond amounts vary case by case. The bond amount is designated by the court. The amount chosen is usually based somewhat on the amount or value of the assets being handled.
Receivership bonds provide a form of guarantee that the appointed receiver will perform the assigned fiduciary duties in accordance with the courts direction and applicable state and federal laws. The bond provides protection for parties with an interest in the financially distressed business. If the receiver acts outside of the court appointed authority and direction, the potential for a claim on the bond arises. The bond provides a path for recourse for interested parties who think the receiver is acting in a manner not acceptable to the court.
Receivership bond rates vary greatly depending on the qualification of the bond applicant/s. The rates are determined based on various factors which include credit standing and may include financial standing as well.
The best way to get a truly accurate quote for a Receivership Bond is to apply for the bond and let the underwriter review the request and put a quote together.
Viking Bond Service, Inc. will always attempt to get the best rate for any surety bond request. In instances where the rate is high to start due to challenged credit, our renewal department can remarket the bond for a lower rate if there has been an improvement in credit and/or financial standing.
Quotes are available for clients with low credit. In many cases, a bond is not out of reach simply due to bad credit.
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