Real Estate - In some situations, court appointed receiverships offer a better alternative to bankruptcy.
The appointment of a receiver has become an effective tool for secured lenders to utilize in order to protect their collateral. When it is apparent that a debtor is spiraling downward and is not cooperating or responding to the lender, an appointed receiver can take total control of the business and the pledged assets that serve as the lender’s collateral.
• Maximizes the net recovery to the lender and the unsecured creditors by realizing greater returns than a forced liquidation is capable of while minimizing the time & expense in doing so.
• Preserves all collateral while exit strategies are formulated and implemented.
• Most assets (Inventory, Receivables, and Intangibles) are worth far more when the business is operating in receivership than they are if the business has closed. Often times, products, product lines, or whole businesses are sold resulting in far greater recovery than the liquidation of all the parts.
• Operating expenses such as payroll, overhead, and material purchases are evaluated and immediately reduced where necessary to increase profitability or lessen the cash burn.
• Management reorganization can be implemented quickly.
• The receiver unravels any and all overlapping liens where multiple secured parties are involved.
• The receiver takes full control of the cash management of the business.