Judge: Stephen I. Goorvitch, Case: 23STCV19050, Date: 2025-04-11 Tentative Ruling

Case Number: 23STCV19050    Hearing Date: April 11, 2025    Dept: 82

McKenna Capital, LLC, et al. v. Eng Taing, et al.

Case No. 23STCV19050

[Tentative] Order Granting Receiver’s Motion Requiring Plaintiffs

to Fund Receivership Costs or, in the alternative, Terminating the Receivership

            Plaintiffs filed this action against Eng Taing and a series of related entities (collectively, “Defendants”) and moved for appointment of a receiver.  The court granted the motion on a limited basis.  (See Court’s Order, dated October 7, 2024.)  The court appointed a limited purpose receiver to: (1) Determine the status and create an inventory of all bitcoin miners;

(2) Locate and create an inventory of all existing liquid assets; (3) Locate and create an inventory of all hard assets; (4) Safeguard any assets which are in jeopardy of being lost without initiating any litigation absent leave of the court; (5) Report the status of the assets/investments to the court and the parties; and (6) Make any recommendations to the court concerning additional duties for the receiver that would be necessary to protect assets and/or avoid waste, fraud, or abuse (including recommendations of how to generate income with the assets).

            Now, the receiver moves for an order: (1) Compelling Eng Taing to comply with the receivership order; (2) Providing further instructions with respect to safeguarding certain receivership property; and (3) Requiring Plaintiffs to fund the receivership costs.  The receiver has not been paid.  The receiver represents as follows:

Because of the lack of funds in my possession, due in part to Mr. Taing’s failure to comply with the Receivership Order, and the increasing fees and costs of the receivership, I requested that the Plaintiffs fund a $50,000 receivership certificate.  The Plaintiffs originally agreed, and in fact prepared and filed the Receivership Certificate with the Court.  However, the Plaintiffs have refused to fund the certificate or to pay costs of the receivership. 

(Lanes Decl. ¶¶ 13-15.)  Plaintiffs insist that the receiver should be paid through the receivership estate.  (Clarke Decl. ¶¶ 6-8.) 

            The court has concerns whether the receivership estate will have sufficient funds to cover the receiver’s expenses.  Moreover, the court agrees with the receiver’s argument that a receiver is not required to accept work in a contingency basis.  Indeed, the court will not require receivers to work on matters—at a party’s request—for which they have not, and likely will not, be paid. 

            Based upon the foregoing, the court orders as follows:

            1.         The court grants the receiver’s motion to require Plaintiffs to fund all of the costs of the receivership. 

            2.         If Plaintiffs wish to maintain the receivership, they shall provide an evergreen retainer of $50,000.  If Plaintiffs elect not to do so, the court intends to terminate the receivership.

            3.         The court continues the hearing on this motion to ________, 2025, at 9:30 a.m. 

            4.         Plaintiffs’ counsel shall file a notice indicating whether they intend to pay the receiver’s costs or whether they wish the court to terminate the receivership or on before ________, 2025.

            5.         The receiver shall provide notice and file proof of service with the court.