The role of a receiver and liquidator in divorce

Pros and cons of liquidators and receivers in divorce proceedings

Liquidators and receivers are more commonly associated with corporate failure. A liquidator is an individual or entity (often an accountancy firm) legally empowered to wind up a company’s affairs when it is closing – typically when the company is going bankrupt. A receiver is someone appointed to be custodian of the property, finances, general assets or business operations of a company going through financial difficulties. When a receiver is appointed, a company is said to be “in receivership”, which is not the same as bankruptcy. The company may wind up going out of business, or it may be sold off or restructured. But what does this have to do with divorce? Well, in a sense, a divorce is a marriage going out of business – in liquidation. (A couple going through marriage counselling are like a company in receivership – the marriage may survive or it may not!)

Divorce proceedings often cause financial disputes, especially when it comes to dividing shared assets. When divorcing spouses cannot agree on how to split their assets, a court may appoint a receiver or liquidator to handle the process. While this can bring clarity and fairness, it also has potential downsides.

The roles of receiver and liquidator

A receiver or liquidator is a neutral third party – typically an attorney, accountant or insolvency practitioner – appointed by the court to oversee, manage and distribute assets in contentious divorce cases. This is particularly necessary when spouses cannot reach agreement or when there is concern about mismanagement or concealment of assets.

A liquidator is responsible for winding up the couple’s estate, just as a liquidator in a corporate setting winds up a company. Their duties include:

• Identifying assets – locating all assets, including properties, vehicles, investments and other valuables
• Valuing assets – assessing the fair market value of these assets
• Selling assets – organising the sale of certain assets, if necessary, through auctions, private sales or other means. This might be necessary where a couple owns intangible assets such as artwork and can’t agree on a fair division. The asset is sold; cash can be more easily divided
• Distributing proceeds – ensuring proceeds from asset sales are distributed fairly as indicated by the divorce settlement or court order

By contrast, a receiver manages and protects assets until they are officially divided. Their responsibilities include:

• Securing assets – taking control of assets to prevent misuse, waste or loss
• Managing assets – overseeing day-to-day management of properties, businesses or investments to maintain or enhance their value
• Protecting assets – implementing safeguards such as insurance, security and maintenance to prevent depreciation
• Facilitating distribution – preparing assets for final division according to the court’s decision or divorce agreement

While there are similarities in their functions, liquidators focus on finalising estate matters, whereas receivers manage and protect assets during the divorce process.

Advantages of appointing a receiver or liquidator

A receiver or liquidator acts impartially to divide assets according to legal agreements, reducing the risk of bias or unfair advantage. They prevent asset concealment or misuse: in high-conflict divorces, one spouse may attempt to hide or deplete joint assets. A receiver ensures assets are secured and preserved. They can also expedite the divorce process. Ongoing disputes over assets can prolong proceedings. A receiver or liquidator streamlines decision-making, minimising delays and legal costs. For divorcing spouses with joint business interests, a receiver can ensure continued operations until a fair division is reached. And if a party fails to comply with a divorce settlement, a receiver has legal authority to execute asset division in line with the court’s decision.

Disadvantages of appointing a receiver or liquidator

Receivers and liquidators charge fees for their services, which may reduce the overall estate value available for division. Once a receiver or liquidator is appointed, both spouses lose direct control over assets, which can be frustrating, especially if they disagree with the receiver’s decisions. Although a receiver helps streamline asset division, legal challenges and administrative processes can still cause delays. A receiver’s powers depend on the scope outlined in the court order, which may restrict their ability to resolve all disputes effectively. Finally, in many cases, divorcing spouses can resolve asset-related disputes through mediation or negotiation, making the appointment of a receiver unnecessary and saving cost. Alternative dispute resolution methods should always be exhausted before resorting to measures such as appointing a liquidator and/or receiver.

Do you need an attorney?

Appointing a receiver or liquidator can be beneficial when dealing with complex assets, business interests or an uncooperative spouse. But at SD Law, we have always championed a mediated solution. A professional mediator does charge a fee, but the result is likely to be a more cost-effective and timely solution. Appointing a receiver and/or liquidator should be considered a last resort, and at SD Law we have a track record of facilitating mediated divorce, including high-conflict and high-net-worth, which allows both parties to walk away with their dignity intact and move on to the next phase of their lives.

We are a firm of family law attorneys based in Cape Town, with offices in Johannesburg and Durban. If you are considering divorce and want to discuss your options, contact Simon on 086 099 5146 or email sdippenaar@sdlaw.co.za.

Further reading:

• Investment division in divorce
• Property division in divorce
• Dealing with hidden assets in divorce
• Protecting high-value assets during divorce
• The benefits of mediation in high-stakes divorce matters

Divorce Attorney Cape Town

http://divorceattorneycapetown.co.za/

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