There are several important ways in which a receiver of a corporation may clash with the trustee under a trust mortgage as regards the use of funds deposited with the trustee. The receiver, who is acting for the benefit of the general creditors and the estate generally, often seeks to obtain funds in the hands of the trustee who represents the bondholders. Not infrequently the trust deed from which the trustee derives his authority contains provisions for the setting up by the mortgagor of a sinking fund; or for the retention of money obtained through the release of properties from a mortgage lien; or for the holding of funds which are to be disbursed for certain payments as required by the trust deed. The litigation results from a refusal by the trustee either to turn over moneys held or to allow their use by the receiver.
TRUST MORTGAGES - FUNDS DEPOSITED WITH THE TRUSTEE - RIGHT OF RECEIVER TO APPROPRIATE,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol32/iss1/6