In keeping account of the regular operations of the receiver, nothing new in principle is met. The receiver must at all times be careful to keep distinct all payments on his own account from those for the corporation. Similarly, he must keep separate the expenses which are incurred by him and those which belong to the corporation but which he pays. It is held, for instance, that the interest charges on the corporation’s obligations are not an operating expense of the receiver although he may be ordered by the court to pay them. Some of his duties will more than likely be to realize partly or fully on some of the assets turned over to him, in addition to the regular trading assets with which he conducts most of the business. These are accounted for on his books just as they would be on the books of the corporation. In a similar way any liabilities liquidated, record of which appears on his books, will be shown canceled in the usual way. As mentioned above, care must be exercised to keep his liabilities separate from those of the corporation. In the payment of liabilities the question of priority often arises. He must be careful in passing on their priority and he may have to secure the instructions of the court before settling the matter. This will be true particularly with regard to receiver’s certificates, the court usually determining at the time of their issue their relative priority as compared with the other liabilities. On the books of the receiver certain expenses will appear which are peculiar to the receivership. These include such items as lawyers’ and accountants’ fees, bonding company costs, etc., and are, of course, to be treated as his expenses. He should close his books periodically, and so far as possible the period of closing should correspond with the regular fiscal period of the corporation for the sake of preserving the continuity of the records for purposes of comparison.
Reports to the Court
The receiver must make periodic reports to the court—the first report to be made shortly after the assumption of his duties. In it he presents schedules or inventories of the properties taken over. If some of these are mortgaged or have other liens on them, the facts should be indicated. At the same time schedules of the corporation’s creditors should be drawn up, grouped under the heads of preferential, secured, unsecured, and contingent. In the preferential group appear those claims against the corporation which are given preference by law, such as taxes due the state, wages due workmen, mechanics’ liens, etc. In the secured group appear the claims of creditors who hold property as partial or full security for their claims. In the unsecured group appear all claims not secured; while in the contingent group appear the usual items of contingent liability such as were discussed in [Chapter XIX].
Subsequent reports will be made to the court at its will or at least once yearly. No standardized form is followed in the submission of these reports, the attorney’s wishes usually governing. The report is designed for the purpose of apprising the court of the progress of the receiver’s administration and should cover such items as the assets realized during the period since the last report, the liabilities liquidated, and the results of the operation of the properties held by the receiver. A convenient form for the showing of this report is that known as the “charge and discharge” form. Under it the receiver is shown charged with certain items of property and income received, and discharged with liabilities paid and other similar items. Whatever variations from this form are needed to meet particular conditions, these should be incorporated. The report may follow somewhat the order of the items shown below.
“The receiver charges himself with:
1. The assets at the date of the receivership (or at the date of the last report), exclusive of permanent or fixed assets.
2. Additions to such assets since discovered.
3. Increments upon realization of such assets.
4. Amounts realized from the sale of permanent or fixed assets.
5. Amounts realized from the sale of receiver’s certificates.