A Receivership Bond is a type of judicial fiduciary surety bond. This surety 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 surety 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.
Anyone ordered to do so by the courts, which is usually anyone planning to act as a receiver. The process cannot move forward until you have the required bond, so there's no reason to delay getting one. Work with a surety brokerage like Viking Bond Service who can get you a quote quickly and get your bond activated immediately.
There are three parties:
Both receivership surety bonds and bankruptcy trustee bonds basically work the same way and exist for the same reason. The only meaningful difference is that receivers and trustees serve different roles within the bankruptcy process. As long as you obtain whatever type of bond the court requires, you should be fine.
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.
Receivership bonds are usually annually renewable. The bond is typically required by the court until the receiver's duties are completed. This time frame 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.
The surety thoroughly investigates all claims to determine if the receiver was in fact derelict in their duty, and to what extent that had financial consequences. A claimant making a valid claim can receive compensation, up to the value of the bond, backed by the surety who guarantees payment if the principal claims to be unable or unwilling to pay. Despite stepping in to pay, however, the surety does not absolve the debt because the principal must always pay the surety back and usually has to pay for the cost of the investigation as well - creating an extra incentive to follow the rules.
Looking for a professional and trustworthy surety provider, contact Viking Bond Service. We operate in all 50 states and write most types of court required surety bonds. You have the option to complete our online application at any time. Or you can contact us first, at 888-278-7389 or by completing the form on this page.
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