Under s. 39(1) of the Law and Equity Act, R.S.B.C. 1996, c. 253 a receiver may be appointed if it is just and convenient to do so. In general, the appointment of a receiver is sought by secured creditors looking to execute on their security, however there are other reasons why parties may look to appoint a receiver, such as to protect business operations and assets.
In Coromandel Properties Ltd. (Re), 2023 BCSC 2187, the sons of one of the principals of a group of companies in real estate development sought to appoint a receiver over the whole group of companies as a governance receiver. In their view, the current management was not managing the operations prudently and assets were being eroded. The practice of the corporate group was for each real estate project to be held by a company as bare trustee, agent and nominee.
Receivers had already been appointed over certain of those companies and real estate projects. Accordingly, the governance receiver would essentially be appointed over other receivers who had already been court appointed. Those receivers argued that this would add unwarranted delay, costs and complexity to the proceedings, particularly in light of the applicants having other remedies available, including under the Business Corporations Act, [SBC 2002] Chapter 57, to compel information and to undertake specific investigations.
While the court agreed that the evidence established that the current management had failed to adequately manage the operations, it held, for a variety of reasons, that the appointment of the receiver was not just and convenient in the circumstances. The court did leave it open for the applicants to apply for a different form of order, receivership or otherwise, on proper notice.