What are Receivership Services?

Receivership services are a remedy, which is authorized by a court’s equity powers. A court-appointed receiver’s job is increasingly in demand for investment fraud cases, corporation collapse, divorce settlements and liquidation of assets. David Frank provides nationwide court receivership services.

What is the Receivership Process?

Benefits of appointing a receiver can restore order and professionalism to protect management, business operations, accounting and reporting to the court about the property that has deteriorated during the period preceding the loan default.

When companies get into financial difficulties they are able to request a receivership. There is a hearing before the court at which time an order is entered and the receiver is now in control of the asset. Most courts expect that litigants will have attempted other means for enforcement prior to requesting the appointment of a receiver. Should the appointment of a receiver be necessary, it is accomplished by filing a motion or a complaint under one of the prescribed statutory provisions. i.e. Chapter 11 bankruptcy is filed when the debtor needs additional time in resolving the financial problems in their business operations. Chapter 7 bankruptcy is filed for the liquidation of the business.

The receivers first role after their appointment is to give a full field report of the property to include a summary and photographs along with any life and safety issues. They usually do this unannounced, take possession of the property and notify businesses, tenants and utilities of their appointment to take over the property. The first priority of the receiver is to come up with a plan to organize, evaluate the asset, and implement their receivership operations.

Appointment of a Court Receiver

In certain circumstances, the court may appoint a receiver to execute a judgment to protect the property. The court appointed receiver, which is the third party for the asset, takes possession of the property, and operates the business asset for the lender. While in Receivership, this protects the lenders from the on-going liabilities with the asset, and because the receiver is an officer of the court, has no connection to the lender.

When the business is in a receivership, the receiver handles all maintenance, utilities, accounting, and management. This is critical to the lender, since the receivership estate maintains the property and the assets are no longer in control of the borrower. This is a voluntary measure and the administrative records are turned over to the receiver. To properly protect the asset, receivers must be knowledgeable in both law and business operation. i.e., hotel, office, hospitality, leasing, administrative services and more.

Under the guidance of the receivership, (as the officer of the court) they receive, care for, administer, and/or dispose of property under the orders of the court. The receivership powers and responsibilities are defined by the order of the appointment, and receivers must follow the court order and respond back to the court through various proceedings.

There are many instances where a receivership is requested for the asset, but they generally fall within one of the following categories:

• Enforcement of a Court Judgment

• Interim Corporate Management

• Real Property Dispute (Issues, Rents and Profits)