What a Receiver Can Do for a Company
When a piece of commercial real estate is being foreclosed and the business is disputing the property management or there is a need for tenant representation services, receivership services are commonly appointed by the court during the proceedings. Receivership services can also oversee any assets that are involved in divorce proceedings. Basically, any case that is brought before a judge where assets are involved may require a receiver. Creditors can even ask the court to appoint receivership services when necessary. Being the receiver isn’t exactly a fun job if you are basing your success on the pleasing of other people. If you are a receiver, generally speaking, no one wants your presence around their company or estate because it usually means that their finances are so out of control that they need someone to legally come in and clean things up for them.
Duties of a Receiver
- The receiver is appointed to take over and run a company in order to:
- Increase the value of the assets of the company and cause it to be more profitable in order to catch up on debts or financial obligations.
- Sell the entire company. This is necessary when the debt ratio for the receiver is too high to salvage.
- Sell part of the company. Sometimes it’s more beneficial to merge with another company or sell part of the business in order to save the rest of it.
- Shut down departments that are unprofitable. Because this does include lay offs, it is often a necessary business decision that the original owner is too emotional to make.
- The receiver is responsible for securing the assets of the company or entity that is under review. Once the assets are considered secure, the company can be handed back to the owner under careful supervision. The manner in which assets are secured is completely in the hands of the receiver.
- He or she also manages the affairs of said company so that debts can start being paid off. The receiver will stay in management until the company is back in good standing.
Types of Receivership Services
- Takeover Services – This is pretty self explanatory. If a receiver is appointed, they will go to the property with a court appointed order to take possession of all assets, including real and personal. Everything is included from cash to property to accounts. The receiver is then responsible for providing reports and inventory to the courts according to the data and information they find. From there, the receiver can stabilize the workers as well as the company during the takeover. They will also send notification of the status of the receivership to any vendors, renters and anyone else who is an invested party.
- Post-takeover Services – After the initial takeover, the receiver can offer their services to protect the company or the franchise by dealing with outstanding taxes, lawsuits, debt, insurance matters, claims or anything else that is affecting the company or property negatively. They will essentially act as a sort of collection service, getting control of deposits from utilities and take care of vendors and leasers.
- Reporting – If the property is foreclosed on, then the receiver at that point will issue a final report to the courts after the foreclosure is complete.
- Ongoing Court Appearance – When necessary, a receiver will be required to provide testimony for legal procedures. These cases can be anything from a borrower contesting a receiver at all to when borrowers fail to follow legal orders to bankruptcy filings from the borrowers.
- Other Types of Services – There are many other services that can be offered by a receiver, depending on the company. Each company will be willing to negotiate services depending on what the customer needs according to the property in question.
Financial disputes are often taken before a judge whether it’s a business or a company or some sort of franchise and receivers are not always willing accepted. The appointment of a receiver means that the owner of the property or company is not going to be in control anymore. Legally, they are required to pass on all assets, control and ownership to the receiver until the courts decide that the franchise is at a stable enough place to give back if they don’t end up selling.