Turnover orders and receivers

Turnover from the debtor

The simplest case is the debtor holding the asset. New York makes the order mandatory once the showing is made.

Show that the debtor holds money or other personal property it has an interest in, and the court must order the debtor to pay the money to the creditor. CPLR 5225(a)¹ uses the word shall. If the money is not enough, other property goes to a designated sheriff. The motion is served on the debtor the way a summons is served, or by registered or certified mail with return receipt.

Two orders widen that reach. The court may order anyone to sign and deliver the document needed to make the payment or delivery happen. CPLR 5225(c) is how a transfer that needs a signature gets one when the signer will not cooperate. And where the debtor is receiving money from any source, or is working for too little to stall the creditor, CPLR 5226² requires an installment order, fixed with regard to the reasonable requirements of the debtor and dependents.

An order that is ignored has a consequence. Under CPLR 5251³, refusal or willful neglect to obey a subpoena, restraining notice or order issued under the enforcement title is punishable as contempt, along with false swearing on an examination and defacing a posted notice of sale. The other direction is open too: CPLR 5240⁴ lets the court at any time deny, limit, condition, regulate, extend or modify any enforcement procedure, on its own initiative or on any interested person's motion.

Florida reaches the same place through proceedings supplementary. Under Fla. Stat. 56.29⁵, the court may enter any orders, judgments or writs needed to subject the debtor's property or property rights to execution, and a person who fails to obey may be held in contempt.

Turnover from others

Often the asset is in somebody else's hands: a bank, a buyer, a person who owes the debtor money. Reaching it is not a motion but a proceeding, and the holder gets more protection than the debtor does.

New York has a word for the person who owes the debtor money or holds the debtor's property. CPLR 105(i)⁶ calls that person a garnishee. Against a garnishee or a transferee, the creditor brings a special proceeding, and CPLR 5225(b) makes the order mandatory where the debtor is entitled to possession or the creditor's rights are superior to the transferee's. Against someone who owes or will owe the debtor money, CPLR 5227⁷ lets the court order the debt paid to the creditor on maturity, or enter a judgment against that person.

A holder who did not pick a fight is not punished for it. Under CPLR 5225(b), costs are not awarded against a person who did not dispute the debtor's interest. The debtor is served too, and the court may let the debtor and any adverse claimant intervene. Before any property is applied to the judgment, CPLR 5239⁸ lets anyone with a stake bring a proceeding to decide competing rights in it.

Timing has its own rules here. A levy goes void at 90 days, but under CPLR 5232(a)⁹ it does not lapse as to property or debts that are the subject of a proceeding under CPLR 5225 or 5227. And a turnover or receivership order filed before another creditor's levy beats that creditor under CPLR 5234(c)¹⁰, provided delivery or payment is completed within 60 days of filing. Miss that window and the priority evaporates.

Florida's path to a third party is the Notice to Appear. It directs the person holding the debtor's property to file an affidavit, in not less than 7 business days, saying why the property should not go to the judgment. Fla. Stat. 56.29 then lets the court order that property levied on and applied. The same section lets the court enter a money judgment against a person to whom the Notice was directed and over whom it obtained personal jurisdiction, whether or not that person still holds the property, and it requires the court to order void a conveyance of personal property made to delay, hinder or defraud creditors, except as to exempt property or property that reached a good-faith buyer for value without notice.

Receivers

Some assets cannot simply be handed over. A rental building, a going business, inventory that has to be sold: these need running, not delivering. For that New York has the receiver.

On the creditor's motion, CPLR 5228(a)¹¹ lets the court appoint a receiver who may administer, collect, improve, lease, repair or sell the debtor's property, or do other acts designed to satisfy the judgment. Note the scope: real or personal property both. A receiver is not confined to things that are not land, whatever its usual use. Once a receiver is in place, orders to pay or deliver run to the receiver instead of the sheriff.

The appointment is bounded. As far as practicable, notice goes to the debtor and to other judgment creditors. The order names the property and the receiver's duties, and the receiver may hire counsel only if the order says so. Pay is capped: necessary expenses and commissions of up to 5 percent of sums received and disbursed, as the court allows. A creditor who takes the receiver's job gets nothing.

A receivership is not a private channel. Another judgment creditor can have it extended to its own judgment under CPLR 5228(b), and a receivership order filed before a levy takes priority over the levying creditor on the same terms a turnover order does.

Florida's receiver in this chapter is built for corporate debtors. Under Fla. Stat. 56.10¹², where an execution against a corporation cannot be satisfied for lack of leviable property, the circuit court may sequester the corporation's property and appoint a receiver.

What this does not cover

Two states, and the general run of personal property. One common asset, a share of a company, has its own rules and is not treated here.

New York and Florida, nothing past them. Every other state sets its own turnover procedure and its own limits on receivers, and the differences are not cosmetic. What is a mandatory order in one place is discretionary in another.

When the asset is a share of a company, the road forks. A receiver can run property, but a membership interest in a limited liability company is reached a different way, and the charging order is where that question goes.

Nobody writing this is a lawyer and none of it is advice. Which procedure fits turns on who holds the asset, whether it can be handed over or must be run, and facts a statute does not contain. What a page can do is narrower. It can tell you that there are three roles here: the debtor, the holder, the person who owes the debtor, and a receiver who can run what nobody can simply deliver. The court can order something different of each.