CPRC Chapter 64 Does Not Apply To Turnover Receiverships

CPRC Chapter 64 does not apply to a turnover receivership.  Flooring Systems, Inc. v. Chow, Civil Action 4:12-CV-475 No. 08-40182 (E.D. Texas 2013)(Affirmed 765 F.3d 518 (5th Cir. 2014); In Re Primera Energy, LLC, Bankr. Court, WD Texas 2018 (Case No. 15-51396-CAG, Adversary No. 15-05047-CAG); Unit 82 Joint Venture v. International Commercial Bank of China, No. 08-13-00088-CV (Civ.App.—El Paso November 5, 2014, pet. denied); Remote Control Hobbies, L.L.C. v. Airborne Freight Corp. No. 14-12-01088-CV (Tex. App.--Houston [14th Dist.] March 27, 2014) no pet. (Venue sections of Ch. 64 did not apply for a turnover receivership.); Schultz v. Cadle Co., 825 S.W.2d 151, 154–55 (Tex. App.—Dallas 1992, writ denied 852 S.W.2d 499 (Tex. 1993), per curiam, (The Ch. 64 requirements for the appointment of a receiver under Ch. 64 did not apply for a turnover receiver.); Holland v. Alker, No. 01-05-00666-CV, 2006 WL 1041785  (Tex. App.—Houston [1st Dist.] Apr. 20, 2006,  pet. denied)( mem. op.).

Attorneys and judges often confuse the two receiverships.  There is not anything in Chapter 64 indicating that the legislature was thinking about §31.002 in 1985, when it codified the general receivership articles into Chapter 64.  With only a few exceptions, the substance of Chapter 64 comes to us from the late 1880s and the early 1900s, well before the turnover statute was enacted in 1979.  The drafters had not conceived of turnover relief, and could not have meant for these laws to apply in a turnover context.

The intent and functioning of the turnover receivership is not at all like that of a Chapter 64 receivership.  The point of the turnover statute is to aid the diligent creditor in collecting its judgment by compelling the defendant to turn over its non-exempt property for liquidation.  In stark contrast, the Chapter 64 receivership contemplates a receiver running a business or preserving property in a prejudgment context.  

Although the receivership order will grant the receiver all of the defendant’s contract rights, the turnover receiver will be using those rights to find and take property, not to run the business.  Do not expect the receiver to pay the debtor’s light bill from proceeds or to give the defendant an allowance.

Vigorously fight debtor’s counsel’s attempts to bootstrap something in Chapter 64 to their arguments in your turnover case.  This is highly technical stuff that your judge is probably not going to be aware of.  Many attorneys and judges think that the rules for one kind of receivership would apply to other kinds of receiverships.  The handout explains how each section of Chapter 64 would not apply to a turnover receivership.

Updated 2020