Opinion ID: 478416
Heading Depth: 2
Heading Rank: 1

Heading: District Court Supervision of Equity Receiverships

Text: 12 As we have recognized, case law involving district court administration of an equity receivership (once the receivership is underway) is sparse and is usually limited to the facts of the particular case. See Lincoln Thrift, 577 F.2d at 607 & n. 11, 608. Two basic principles emerge, however, from cases involving equitable receiverships, many of which involve SEC-initiated receiverships. 13 First, a district court's power to supervise an equity receivership and to determine the appropriate action to be taken in the administration of the receivership is extremely broad. [I]t is a recognized principle of law that the district court has broad powers and wide discretion to determine the appropriate relief in an equity receivership. Lincoln Thrift, 577 F.2d at 606; see Safety Finance, 674 F.2d at 373 (a court overseeing a receivership is accorded wide discretionary powers in light of the concern for orderly administration). The basis for broad deference to the district court's supervisory role in equity receiverships arises out of the fact that most receiverships involve multiple parties and complex transactions. In Lincoln Thrift, we reviewed a district court's denial of a creditor's motion to appoint additional trustee-receivers or, in the alternative, to appoint a creditor's committee to elect new trustee-receivers. We observed: 14 Neither party to this action cites any case which discusses whether this Court has the authority to actively enter the district court proceeding and give specific orders to the district court as to the method of conducting the equity receivership. We have not been any more successful than either of the parties in finding a case in point. It does, however, seem that it would be a cumbersome situation at best were this Court to actively intervene in the operation of the receivership, a position which should be avoided. 15 Lincoln Thrift, 577 F.2d at 608-09. We then concluded: 16 [T]his court should not place itself in the position of second guessing a district court judge who had an opportunity to acquire substantial knowledge of the facts and to evaluate the various legal positions after hearing their merits put forth by the various parties, particularly when there appears to be no clear abuse of discretion. 17 Id. at 609; see An-Car Oil 604 F.2d at 119 (We hesitate to second-guess a discretionary decision made by the district court concerning a complicated matter with which it had intimate working knowledge for more than two years.). 18 Secondly, we have acknowledged that a primary purpose of equity receiverships is to promote orderly and efficient administration of the estate by the district court for the benefit of creditors. See SEC v. Wencke (Wencke II), 783 F.2d 829, 837 n. 9 (9th Cir.1986); First Empire Bank-New York v. FDIC, 572 F.2d 1361, 1368 (9th Cir.), cert. denied, 439 U.S. 919, 99 S.Ct. 293, 58 L.Ed.2d 265 (1978); accord Safety Finance, 674 F.2d at 373. Accordingly, we generally uphold reasonable procedures instituted by the district court that serve this purpose. 3 19 We reemphasize these basic principles. A district judge supervising an equity receivership faces a myriad of complicated problems in dealing with the various parties and issues involved in administering the receivership. Reasonable adminstrative procedures, crafted to deal with the complex circumstances of each case, will be upheld. A district judge simply cannot effectively and successfully supervise a receivership and protect the interests of its beneficiaries absent broad discretionary power. We would be remiss were we to interfere with a district court's supervision of an equity receivership absent a clear abuse of discretion. Viewed in light of these considerations, the district court did not abuse its discretion in denying Intervenors' motions in the circumstances of this case.