How to get your money in Texas
James W Volberding[1]
Volberding Legal Group, Tyler, Texas
james@volberdinglawfirm.com
‘A deal is a deal, and in Texas we enforce deals.’[2]
The Texan economy leads in real estate, banking and energy. By one estimate, Texas, as a country, would be the eighth largest by gross national product, ahead of Canada and Italy.[3] It is likely that, eventually, one of your clients will need to recover money or assets from a Texan individual or company. Asset recovery procedures in all US states are inefficient, ineffective, slow and expensive. Texas, however, has an effective procedure which allows a creditor to reach assets of debtors directly. It is called ‘receivership’. Receivership in Texas is similar to liquidation, administration and trusteeship in other countries, but with differences favouring creditors, efficiency and speed.
Texas state courts recognise foreign judgments in certain circumstances. US federal courts permit discretionary registration of court judgments from approved countries.[4] Such judgments may be domesticated in a Texas state court, thereby becoming an enforceable Texas judgment.[5] From there, the state or federal judge may appoint a ‘Receiver’, for the judgment debtor.[6] Once a receivership order is signed, all the judgment debtor’s non-exempt property becomes property in custodia legis, or ‘in the custody of the law’, controlled by a single state court.[7] The judgment debtor’s property is considered to be in the constructive possession of the court. During the pendency of a receivership, the Receiver has exclusive possession and custody of the judgment debtor’s property to which the receivership relates.
As an officer of the court, thereby protected by derived judicial immunity, the Receiver may directly seize and sell the judgment debtor’s non-exempt assets.[8] The Receiver may directly request and seize bank accounts, real estate, investment funds, companies, websites, customer payments, offices and businesses. The Receiver can take over and run an ongoing business, terminating officers and hiring replacement officers, managers and lawyers as required.
Such actions often trigger litigation by the judgment debtor, to which the Receiver will respond, equipped with robust supporting Texas receivership law. Receivers in Texas are typically paid a 25 per cent contingency fee, taxed to the judgment debtor, therefore additional to the judgment.[9]
Texas is a large state, with 254 counties and four federal judicial districts. Receiverships are nearly impossible in Bexar County (San Antonio) and Travis County (Austin) because those counties modified local judicial procedures with the result that litigation is more difficult, expensive and tilted toward defendants. The remaining Texas counties and federal districts are generally receptive to the appointment of Receivers and subsequent supporting litigation.
Texas law is unsettled with regard to a form of corporations called ‘limited liability companies’ (LLCs).[10] The state Legislature amended statutes purporting to restrict actions against LLCs to an ineffectual and easily evaded procedure called ‘charging orders’.[11] A charging order is essentially a voluntary court instruction that the LLC distribute funds, if and when it decides to do so, to the creditor or receiver. Texas appellate courts have split on receivership and creditor enforcement against LLCs, upholding enforcement against non-functioning LLCs, and against non-professional LLCs (eg, real estate holding companies) but not against professional LLCs (eg, doctors).[12] Generally, however, a Receiver may recover assets from an LLC, but appellate challenges by a judgment debtor may cause delays.
If your client needs to recover assets in Texas, cost-effective procedures are available through receiverships.
[1] James W. Volberding, CPA, is a US civil litigation attorney, licensed in Texas, often appointed as a Receiver. He is a member of the International Bar Association (Insolvency Section), National Association of Federal Equity Receivers and the Texas Trial Lawyers Association.
[2] Excess Underwriters at Lloyd’s v Frank’s Casing Crew and Rental Tools Inc 246 SW3d 42 at 69 (Tex 2008) (Wainwright J concurring).
[3] US Bureau of Economic Analysis (BEA), ‘Gross Domestic Product by State and Personal Income by State, 4th Quarter 2024 and Preliminary 2024’ (BEA 25-12) (Texas $2,583,866 million, 2023) www.bea.gov/sites/default/files/2025-03/stgdppi4q24-a2024.pdf accessed 11 June 2025; World Bank Group, Data, GDP (Italy, 2023 GDP (US$ 2,300,941.15 million) https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?most_recent_value_desc=true&year_high_desc=true accessed 11 June 2025.
[4] See, eg, 28 USC § 1963 (2023) – Registration of judgments for enforcement in other districts; Hilton v Guyot 159 US 113 (1895); see, eg, Clarkson Co v Shaheen 544 F2d 624 (2d Cir 1976).
[5] See Uniform Enforcement of Foreign Judgments Act (UEFJA), eg, Tex Civ Prac & Rem Code Ch 35 (2023); Uniform Foreign Country Money-Judgment Recognition Act Tex Civ Prac & Rem Code § 36A.003 (2023) (UFCMJRA); Tanner v McCarthy 274 SW3d 311 at 320 (Tex App – Houston [1st Dist] 2008, no pet) (Federal court judgment domesticated in state court).
[6] See, eg, Tex Civ Prac & Rem Code Ch 31 (2023) (post-judgment receivership statute); also Fed R Civ P 64 at 66.
[7] See First Southern Properties Inc v Vallone 533 SW2d 339 (Tex 1976); Neel v Fuller 557 SW2d 73 at 76 (Tex 1977).
[8] See, eg, Davis v West 317 SW3d 301 at 307 (Tex App – Houston [1st Dist] 2009, no pet) (immunity doctrine).
[9] See, eg, SEC v Stanford Int’l Bank Ltd Civil Action No 3:09-cv-00298-N, 2018 US Dist LEXIS 57257 at *31 (ND Tex 2018); see also SEC v Temme No 4:11-cv-00655-ALM, 2012 US Dist LEXIS 196813 at *4–5 (ED Tex 21 November 2012), ECF No 162 (25 per cent contingent fee for a $1,335,000 receivership settlement); Hill v Hill 460 SW3d 751 at 767 (Tex App – Dallas 2015, pet denied) (rejecting argument that trial court had no legal basis to assess 100 per cent of receiver’s post-judgment fees against single party and that doing so amounted to impermissible sanction).
[10] See, eg, Pajooh v Royal West Investments LLC Series E 518 SW3d 557 at 562–65 (Tex App – Houston [1st Dist] 2017, no pet) (limiting LLC recovery to charging order).
[11] Tex Bus Orgs Code § 101.112(d) (2023).
[12] See, eg, WC 4th and Colorado LP v Colorado Third Street LLC No 14-22-00764-CV, 2025 Tex App LEXIS 2857 (Tex App – Houston [14th Dist] 29 April 2025) (op rehearing; motion rehearing pending).