Turnarounds & Workouts Publishes Otterbourg Article on Key Considerations for Receivers
March 31, 2025
Turnarounds & Workouts has published the article “Mapping Fair Outcomes in Receiverships,” written by Otterbourg partners David Castleman and Jennifer Feeney and of counsel Michael Maizel.
The article discusses some highlights and key takeaways from the receivership in the nine-figure Ponzi scheme involving the crypto platform EminiFX, a case that involved tens of thousands of investors and only a handful of unsecured creditors. Castleman is the court-appointed receiver over EminiFX, with Feeney and Maizel serving as his counsel in the case.
The authors examine a key consideration for receivers when appointed to a case – whether investments “were commingled or segregated while the entity in receivership was operating.” They also look at some of the differences between receiverships and bankruptcies, noting that, among other things, a receiver “has broad discretion to prioritize the payment of investors relative to creditors in a receivership.”
The article concludes by noting that, while bankruptcies and federal equity receiverships are both “rooted in the equitable power of the federal courts, and that is the fundamental goal of each process,” the bankruptcy code’s priority scheme ensures uniformity, which is not the case in many federal equity receiverships. “The increased flexibility that district courts have to approve a receivership distribution plan,” the authors add, “allows for those differences to be reflected in the distribution plan, so that all stakeholders are treated equitably.”
To read the article in full, please click here.