Receivership: Everything You Need to Know

August 7, 2020

Receivership: Everything You Need to Know

With remote working on the rise and social distancing measures still in place, the state of businesses or properties has changed significantly. For many retailers or properties that have accrued a large amount of debt, beginning the receivership process may be the next step. Unlike liquidation that often spells the end of business altogether, receivership can be a move in the right direction for recovering and preserving business assets of all kinds.

Understanding receivership is an important first step in initiating the process and finding a trustworthy receiver. While the process appears complicated at first glance, closer inspection reveals a relatively straightforward system with a definite goal in mind. Let’s take a closer look at what receivership entails.

Whether it results from a court order or the property owner initiates the process, receivership can be a confusing ordeal. Find more info on the process here. #TarantinoProperties Click To Tweet

The Receivership Process

The process of receivership begins when a court appoints a receiver agent to take over managing a property and help lenders recover losses, or when the company decides to hire a receiver themselves for the same reasons. In either case, the receiver enters as a neutral third party. They assume legal ownership of the property in all but name, taking over all responsibilities and money management. The receiver then continues to keep the company functioning while gradually paying back the company’s creditors to reduce the debt.

The End Goal

Ultimately, receivership is about satisfying both the borrower and the lender in a professional relationship. For lenders, it’s a helpful way to make sure the business’s income is being used for incoming bills. Having a receiver in place can help keep business owners accountable, reducing the chances of rent skimming or waste. 

  • Rent Skimming – When business owners use any income from rent payment toward something other than paying the mortgage or maintaining the property.
  • Waste – When business owners neglect the needs of their property or building, which ultimately affects the real estate value. 

With a receiver acting on behalf of the court’s order, there is authority in place to protect company assets. At the end of the day, the goal is to help a business recover. In the same way, creditors are given the opportunity to recoup more of their funds, allowing all parties to maximize profitability.

Pro Tip: Finding the right administrative receiver for a property doesn’t have to be difficult. If a business is facing foreclosure, it’s important to get in touch with a qualified attorney to make the right steps.

Securing Your Assets

Giving up control of your property may seem daunting. However, handing the reins to a trustworthy receiver is the best decision you could make in dire financial straits. Let us come alongside you and help you improve your situation.

Tarantino Properties offers professional receivership services to any business that needs it, including multifamily, senior living, commercial, and student housing properties. Get in touch with us to get the receivership process started.