Welcome to Trigild's eTips, a complimhrentary monthly publication written for lenders, servicers and other professionals
dealing with commercial non-performing loans. Each month we provide quick bites to help you maximize your loan
recovery. We welcome your questions and comments, and if there are others in your organization who can benefit from
Trigild's eTips, please add their email address into "Join Our List."
Types of Receivership
Question: How many different kinds of receiverships are there?
Answer: While there are many forms of receivership, some specifically dealing with failed railroads, banks or utility
companies--most commercial lenders and servic ers deal with two:
- A "Rents and Profits" receiver takes legal possession of only specific assets that are part of the lender's security, as
well as rents or operating income from the principal asset (like a hotel)
- A "General Assets" receiver is appointed to take possession of an entire legal entity as well as any and all assets in
the defendant's possession.
Question: So if we have a receiver appointed for a company that owns a group of restaurants, what exactly does the
receiver take control of?
Answer: The assets that are part of the lender's security are what the receiver can take possession of . It could be the
entire company, or a "General Assets" receivership, but only if the loan documents specifically include the parent
company. Typic ally the receivership will fall under the "Rents and Profits" category because the lender has a secured
interest in land, buildings, inventories, income and other assets, but not in the parent company itself.
Even though the foreclosure suit might be titled "ABC Bank v. XYZ Company," it does not in itself mean that the receiver
acts as a receiver for the entire company, even if the company owns these restaurants and nothing else. The receiver
may, however, take records and other items from the corporate off ice if they pertain to the restaurant assets. Logically,
with the restaurants and all related income gone, the parent company has no viable business. The company does
continue to exist, however, and ret ains all of the bills, wages and other debts. The receiver takes all of the receivership related
asset's income on hand, including any income earned prior to the receiver's appointment.
Legal Definitions
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