Receivership and Recession
In law, receivership is the situation in which a real property is being held by a receiver. A person placed in custodial responsibility for the property of others is a court appointed receiver. Court–appointed receiver are “the most powerful and independent of the judicially appointed managers” The receiver completely displaces the defendants: the receiver makes large and small decisions, spends the organizations funds, administers and markets the property, and controls hiring and firing determinations.
Quite often, the property manager will receive only a few days notice when it is brought in to assume management of property. The ability to bring together the people and resources needed and dedicated internal systems on relatively short notice is key to establish a reputation for being able to take on receivership responsibilities.
What causes a Receivership?
Receivership results from real estate foreclosures. Creditors can petition the court to establish a receiver for the experience and expertise to protect the property’s value for the possible sale of the properties.
How is a Receiver Appointed?
The appointment of a receiver is accomplished by filing a motion or complaint under one of the prescribed statutory provisions.
Does the receiver bleed the business dry to satisfy the creditor’s claims?
The receiver is mandated by law to use his best efforts to reserve the viability of the property while enforcing the court’s order. The receiver can bring a fresh management perspective to the business well beyond the receivership period and is the best candidate to continue with the new owner because of the familiarity of the employees, property and operations.
How much does it cost to appoint a receiver?
Although the cost of a receiver are usually paid through the receivership estate, the creditor must advance the cost necessary to appoint the receiver. If there are not sufficient liquid funds available within the receivership estate to support the operation expenses, the moving party will need to loan the funds to the receivership estate through a Receiver’s Certificate.
Your Bridge Between Receivership and Disposition