Trigild’s eTips is a complimentary monthly email publication written for lenders, servicers and other professionals dealing with commercial non-performing loans. Each month we provide quick tidbits to help you maximize your loan recovery. We welcome your questions and comments.

This month’s eTips question was submitted by a reader. Thank you!

Rent Rolls and Membership Lists

Question: We had a receiver appointed for a property that depends on rent from many tenants. The debtor has not turned over a rent role, and the Receiver has advised us it will be very expensive to go back to court to get it. Is that true?

Answer:Because this matter is straight forward, the process should be easy and quick, and therefore inexpensive. A well drafted Order Appointing Receiver will include a section ordering the debtor/defendant to produce all business documents and to otherwise cooperate with the Receiver. A rent role would certainly be considered a business document.

For most uncooperative debtors, a simple call from the Receiver is all that is needed, especially when it is brought to their attention that by not providing the documents puts them in violation of the Order, and the Receiver will need to let the Judge know.

If in the uncommon situation the borrower is still not cooperative, the receiver can notify the judge. One of the “encouragements” a judge can offer to a uncooperative party is to issue a “show cause” order, which is basically an order for that party to explain to the judge why they should not be held in contempt of court for failing to honor the Order Appointing Receiver. It is well within the power of the judge to cite debtors for contempt and have them jailed until they comply, which is more than enough inducement for most debtors.

If the Order Appointing Receiver did not order the debtor to produce business documents, the Receiver can ask the judge to amend the order in order to include them.

The court does not require that a Receiver be an attorney, and therefore allows a bit more informality for Receivers. We have had judges go so far as to give our Receiver a cell phone or home number when it was expected there might be unique problems.

Question: We were under the impression that the Receiver would need to hire legal counsel to represent him in this matter. Is that true?

Answer: No. The Receiver can appear on his/her own behalf. Paying for a Receiver and his or her attorney can more than double your cost—and that is the reason you want an experienced, qualified Receiver who will not require the advice of outside counsel for regular receiver matters

Legal Definitions

Order to Show Cause: A judge’s written mandate that a party appear in court on a certain date and give reasons, legal and/or factual (show cause) why a particular order should not be made. This rather stringent method of making a party appear with proof and legal arguments is applied to cases of possible contempt for sanctions for failure to file necessary documents or appear previously. Source: Law.com

Receiver: A disinterested person appointed by a court, or by a corporation or other person, for the protection or collection of property that is the subject of diverse claims.

About Trigild

Trigild is the only non-performing commercial loan specialist that combines receivership trustee, management and disposition services under one roof. That means no coordinating multiple companies, and no duplication of fees. We have the expertise to quickly take control of the assets, maximize operating results, and speed recovery by selling the assets quickly through our national network of industry contacts. This is our core business, not a sideline. The results? Absolute certainty that you will achieve maximum loan recovery-faster, easier and more cost-effectively.

If you have a question that you would like eTips to answer, please e-mail us at eTips@trigild.com