When a person or entity becomes bankrupt or if the matter involves property that is in dispute, many courts will appoint a receiver to take custody of the business, property, rents and profits of the insolvent party, or person whose property is in dispute.
The bond guarantees performance of the receiver’s duties and obligations of the receivership. If any loss occurs to the property assigned to the receiver due to his/her negligence, or dishonest acts, the receiver is responsible for damages.
The bond amount varies, and is determined by the court. The bond rate ranges anywhere from 0.5% to 2% of the bond amount for premium, based on approved credit.