Simon PLC Attorneys & Counselors – 2022 Update of Receivership Case Studies
Note: This is an update to the article Receivership Case Studies published on August 12th, 2019. You can read the original article here.
Troy, Michigan – Court appointed receiver Frank R. Simon, Esq., along with the receivership and turnaround Team of Simon PLC Attorneys and Counselors, are often asked to summarize their experience handling different types of cases involving court supervised borrowers and their collateral. Simon’s appointments have included receiverships, assignments for the benefit of creditors, bankruptcy, and similar actions in both state and federal court. Simon and the Team have a proven track record of working with difficult assets, debtors and businesses. In addition to the goal of maximizing creditor recoveries to the receivership estate, the Team employs an approach that in all cases attempts to leave the collateral in an improved position for future growth and productivity.
The following case studies represent a broad array of Simon’s and the Team’s recent experience with complex assets, businesses and their circumstances.
Case Study No. 1: Post Judgment Debt Recovery
Obtaining a money judgment can be a hollow victory if there is no realistic chance of collecting on it. One collection remedy is the appointment of a receiver of the judgment debtor’s assets. In many instances, a receiver will be able to act swiftly and efficiently in taking possession of the assets and related financial information. A receiver can obtain banking records and other financial data almost immediately, while a judgment creditor proceeding without the benefit of a receiver may have to wait months for formal responses to subpoenas for such information. Moreover, if assets are located, a receiver will be able to quickly seize and secure those assets for the benefit of the judgment creditor.
In a recent case, a creditor had recovered a $100,000 judgment and after 7 years of limited success on collection efforts, deemed the judgment uncollectable. In a final effort at recovery, the creditor obtained the appointment of a receiver of the debtor’s assets. The Receiver was able to obtain recent a credit application of the debtor and thereby locate and seize bank accounts. This in turn led to the satisfaction of the judgment in full, plus all of the Receiver’s fees and costs.
Case Study No. 2: Homeowner’s Association
A homeowner’s association was subject to a bitter dispute regarding management, election of a board and approval of basic ongoing expenses, all which led to decisions coming to a standstill. Upon his appointment, the Receiver was able to take control of the bank accounts, schedule and conduct a meeting of the homeowners’ association and elect a governing board. The Receiver then prepared controlling documents to govern the association going forward.
Case Study No. 3: Partnership Dispute
The receiver was appointed over an oil change shop that involved a dispute between the owners regarding control and ownership interests in the business, as well as ongoing discovery disputes over financial records. Upon his appointment, the Receiver took steps to stabilize the business by communicating with key suppliers, taking control of the bank accounts and working with management to ensure that the operations would no longer be impacted by the dispute.
The Receiver was also able to compile financial reports, provide employee oversight and address several short-term financial struggles of the business. This preserved the ongoing business operations and allowed the parties an opportunity to successfully negotiate a resolution of their dispute.
Case Study No. 4: Hotel
The receiver was appointed over a 114 room fully operational hotel catering to regular business travelers and airport traffic coming out of the Covid 19 Pandemic. The receiver coordinated for the installation of an interim management company, stabilized employee retention, resolved outstanding flag and branding issues with the franchisor, and began implementation of neglected physical plant upgrades and brand standards. Within two months of the receiver’s appointment , operations have stabilized, and the receiver is beginning a marketing plan to assess the disposition of the business.
Case Study No. 5: Partition Commissioner
A Partition Commissioner is nominated and appointed when disputes arise between co-owners of real property, such as land or buildings. Most often, the partition commissioner will be ordered by the court to sell the property being disputed and oversee the distribution of the sale’s proceeds between co-owners. A common example is when numerous parties jointly own a piece of property, and one party wants to sell the property and split the proceeds, but another wants to wait until the market warms up. As a last resort, one or more parties will seek the appointment of a partition commissioner to “partition” the property. Recently, Frank Simon served as partition commissioner in a dispute between 6 family members, all of whom had different positions as to the disposition of real property. The commissioner was able to find a purchaser, conduct an auction and sell the asset for over asking value.
Case Study No. 6: Compliance with Divorce Orders
Receiverships are regularly used and extremely effective in family court actions including divorce. In a recent appointment as Receiver, Simon has been asked by the court to take action to seize, market and sell marital real property which has been out of compliance with court orders for over a decade under the Judgment of Divorce. The Defendant had failed to remove a spouse from a third party mortgage loan, or otherwise dispose of the property. In the course of less than sixty days the receiver took control of the property, engaged a co-listing broker, and secured several offers for the property.
Simon PLC Attorneys & Counselors is a full-service financial institution and commercial litigation law firm with its main office in Troy, Michigan that for more than two decades has provided service to clients in multiple jurisdictions throughout the United States and Canada. Frank R. Simon is a distinguished specialist in receivership, turnaround and resolution of distressed assets who has regularly been called upon and appointed as Receiver in multiple jurisdictions. Mr. Simon is admitted to practice law in Michigan, Illinois, New York, and the District of Columbia and is a licensed real estate broker.
