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Avoidance Powers of a Federal Court Receiver – Redux

On December 2, 2013, I wrote about the avoidance powers of a federal court receiver, noting the Fifth Circuit’s rejection of the receiver’s argument that he was empowered to pursue claims of the creditors of the entity placed into receivership.  Janvey v. Democratic Senatorial Campaign Committee, Inc., 712 F. 3d 185 (5th Cir. 2013).  That same receiver now seeks Supreme Court review of a similar decision by the Fifth Circuit. Janvey v. Alguire, No. 11-10838, 2013 U.S. App. LEXIS 18181 (5th Cir. Aug. 30, 2013), petition for cert. filed, 2013 U.S. Briefs 913 (U.S. Jan. 22, 2014)(No. 13-913).  The receiver sought to pursue fraudulent transfer claims against former employees of Stanford arising out of a massive Ponzi scheme.

In the petition for certiorari, the Stanford Receiver frames the question:

In McCandless v. Furlaud, 296 U.S. 140, 159 (1935), this Court held that a federal equity receiver can function “as the representative of creditors” generally (as opposed to representing a particular individual or group of creditors) and has standing to sue “in their behalf. . . .”  The judgment below, by contrast, holds that receivers never have standing to sue on behalf of creditors, but are limited “to assert[ing] claims of the entities in receivership. . . .”  App., infra, 5a.  Cases from the courts of appeals vary greatly on this issue.

The question presented is whether a federal equity receiver has standing to assert claims on behalf of the receivership’s creditors generally.

There has not yet been a decision by the Supreme Court of the United States on the petition for certiorari.

 —William R. O'Bryan, Jr.