The Standard for the Appointment of a Receiver in Nevada

In Nevada, the appointment of a receiver over a business may be appropriate if:

  1. The appointment of a receiver is governed by statute and is appropriate only under circumstances described in statute.  State ex rel. Nenzel v. Second Jud. Dist. Ct., 49 Nev. 145, 155, 241 P. 317 (1925); Shelton v. Second Jud. Dist. Ct., 49 Nev. 487, 494, 185 P.2d 320 (1947);
  2. Any stockholder may apply if the corporation is insolvent. NRS 78.347;
  3. Any holder of 1/10 of a corporation’s issued and outstanding stock may apply for the appointment of a receiver when a corporation has been mismanaged. NRS 78.650.  A showing of any one of the ten circumstances enumerated in the statue will authorize the appointment of a receiver upon application by a ten-percent shareholder. Transcontinental Oil Co. of Nev. v. Free, 80 Nev. 207, 210-11, 391 P.2d 317, 319 (1964);
  4. A holder of 1/10 of issued stock may apply for appointment of a receiver of a solvent corporation where the business is being conducted at a great loss, the operation is prejudicial to creditors or stockholders such that the business cannot be conducted with safety to the public. NRS 78.630;
  5. The Court must consider the entire circumstances of the case when considering the appointment of a receiver. Bowler v. Leonard, 70 Nev. 370, 383 (1954);
  6. A Receiver may be appointed when a corporate is in imminent danger of insolvency. NRS 32.010;
  7. A Receiver is a neutral party appointed by the court to preserve, protect, and administer the business’ assets for benefit the business. In all cases, directors or trustees who have been guilty of no negligence nor active breach of duty must be preferred over all others in making the appointment of a receiver. NRS 78.650.  Peri-Gil Corp. v. Sutton, 84 Nev. 406, 411 422 P.2d 35, 38 (1968).  Such directors have a right to be heard as to their qualifications. Shelton v. Second Jud. Dist. Ct., 64 Nev. 487, 492-93, 185 P.2d 320, 323 (1947); and
  8. Appointment of a receiver is appropriate when the business’ property at issue is at risk of waste, loss of income, or is insufficient to secure a debt. NRS 32.010; NRS 107.100;

The appointment of a receiver is appropriate as a means of preserving the status quo.  Pursuant to NRS 33.010, a preliminary injunction may be issued where it appears that the plaintiff is entitled to the relief demanded in the plaintiff’s complaint, that the defendant’s actions threaten to cause irreparable harm to the plaintiff, and that the defendant is violating, or threatening to violate plaintiff’s right with respect to the subject matter of the action. Anes v. Crown P’ship, Inc., 932 P.2d 1067, 13 Nev. 195 (1997); Lynn v. Ingalls, 672 P.2d 797, 100 Nev. 15 (1984); Hein v. Plant, 99 Nev. 259, 661 P.2d 880 (1983); Tupper v. Kroc, 88 Nev. 146 (1972); Peri-Gil Corp. v. Sutton, 84 Nev. 406, 442 P.2d 35 (1968); Bowler v. Leonard, 269 P.2d 833, 70 Nev. 370 (1954); State ex rel. Nenzel v. Sec. Jud. Dist. Ct., 241 P. 317, 49 Nev. 145 (1925); Johnson v. Steel, Inc., 100 Nev.181, 183, 678 P.2d 76, 678 (1984).


See elements for other claims at the Nevada Law Library



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