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Business Restructuring Alert: Who is legally required to pay a receiver’s fees and expenses when the receivership estate does not have sufficient fund

In most state court receivership cases, the order appointing the receiver includes the procedures for the compensation of the receiver and reimbursement of his or her expenses, including the fees and expenses of professionals retained by the receiver. A recent case decided by the Eighth District Court of Appeals of Ohio on November 8, 2012, Dyczkiewycz v. Tremont Ridge Phase 1 Ltd., 2012-Ohio 5173, highlights certain uncertainties in Ohio’s receivership laws in situations where (i) the order appointing receiver does not specifically obligate one or more creditor parties to pay the allowed fees and expenses of a receiver, and (ii) the receivership estate does not have sufficient funds to pay the receiver’s fees and expenses in full after payment of secured obligations.