Simon PLC Attorneys & Counselors Receivership Case Studies

Simon PLC Attorneys & Counselors Receivership Case Studies

Bloomfield Hills, 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:
Liquidation of Retirement Accounts and Medicine

Simon served as Assignee for the benefit of creditors for four businesses run by a
notorious convicted doctor. The doctor was arrested and charged with health care fraud
after the assignment had been made. While the criminal case was pending, Simon and
the Team wound down the businesses and preserved the contents of their six satellite
locations. The wind down included liquidation and collection of certificates of need,
rebates and refunds of medications, furniture and equipment, and accounts receivable.
In a notable event, when the Assignee took control of several of the facilities there were
numerous boxes of unopened medicine and pharmaceuticals. The Assignee secured the
pharmaceuticals from potential abuse, returned the medications to the various suppliers,
and obtained a refund in excess of $1 million dollars. The Assignee also took control of
thousands of medical records and was able to preserve and coordinate release of the
records to the doctor’s victims and to the United States Department of Justice.
As Assignee, Simon also established a claims process and reviewed and administered
hundreds of claims to the assets in the estate. As part of this process he coordinated
resolution of claims among a number of state and federal agencies, as well as
individuals. Along with his role as Assignee, and at the request of the United States
Department of Labor, Simon also served as a Special Fiduciary of the businesses’
retirement plans. In this role the Team administered and liquidated the plan accounts in
accordance with the Employee Retirement Income Security Act (ERISA) and court orders.

Case Study No. 2:
Closure of the Nation’s First Regional Shopping Mall

When Northland Mall opened in Michigan in 1954 it was the world’s largest shopping
center. While the 1.5 million square foot mall opened to much fanfare, during the 1980s
and 1990s it had a turnover of major tenants and loss of anchors. In the summer of 2014,
its owner defaulted on its loan, and the Oakland County Circuit Court appointed Simon as
The Receiver faced numerous challenges due to deferred maintenance, aging
infrastructure and loss of tenants. After several months of operations, the final few
anchor store announced their closure which required the Receiver to close the mall
permanently. During this process the Receiver collected rents and common area
maintenance charges from the tenants, as well as liquidated furniture, artwork, and
fixtures of the property. The Receiver also recovered a sizeable property tax refund and
settled claims regarding unpaid water charges. This allowed the estate to fund security
and wind-down expenses without further capital input from the lender and allowed the
Receiver additional time to negotiate a sale of the property to the City of Southfield.

Case Study No. 3:
Recovery of Insurance Claims

As Receiver, Simon was appointed to secure and manage a 175,609 sq. ft. plaza/shopping
center during the redemption period. The Receiver was able to determine that several
current utility accounts were unnecessary and ceased services to those accounts.
Refunds from these accounts were approximately $20,000. The Receiver also was able to
pursue insurance claims for damage to the Property and recovered several hundred
thousand dollars under the policy.

Case Study No. 4:
Reduction of Tax Liability and Lien Removal

The Receiver was appointed to facilitate the transfer of a Class C Liquor License to a third
party. The license was encumbered by Unemployment and State Tax Liens in excess of
$140,000.00 from the prior manager/operator who failed to pay its tax liabilities under
the correct name. The named license holder, the current tenant/property manager and
the real property owner were all being named as having successor tax liability and
responsibility for the payment of the sums owed to the State of Michigan. The Receiver
worked with the State to determine the correct ownership of the tax liability and obtained
written release of the successor liability for the current tenant/property manager and real
property owner. Upon the written release of the successor tax responsibility, the Receiver
was able to move forward with the sale of the liquor license.

Case Study No. 5:
Recovery of Voidable Transfers in a Divorce

Receiverships are particularly useful in family court actions including divorce. In a postdivorce
judgment case, Simon was appointed as Receiver to collect sums owed to the
Plaintiff under the Judgment of Divorce. The Defendant was unwilling to pay the sums
awarded to the Plaintiff and thwarted the efforts of Plaintiff’s counsel to collect. The
Receiver reviewed the assets of the Defendant to determine a recovery plan. The Receiver
received notice that the Defendant liquidated his 401K account after his appointment and
obtained a Bench Warrant for the Defendant. The aggressive collection efforts of the
Receiver encouraged the Defendant to seek resolution. With the Receiver’s help, the
parties reached a settlement agreement.

Case Study No. 6:
Closed Business and Recovery of Receivables

A physical therapy clinic had closed, and its owners had fled the country or been
incarcerated. The Receiver was able to recover several hundred thousand dollars in
receivables for the benefit of its creditors and wind down the affairs of the clinic, as well
as preserve medical records.

Case Study No. 7:
Administration and Sale of Assets in Numerous States

Simon was appointed as receiver of a national provider of home care services, including
medical and personal care; and medical staffing services to numerous types of acute care
and sub-acute care medical facilities. The Company provided nurses, certified nursing
assistants, home health aides, homemakers, and companions to home care clients and
medical facilities through a network of Company owned and affiliate offices. Through the
actions of the Receiver and his consultants, there was EBITDA improvement of
approximately $3.5 million, or 7 percent of revenue, and a full principal recovery for the
Company’s secured lender.
The receiver, interim CEO, and the consultants identified a number of cost reduction
actions that were implemented within one to two months of the receiver’s appointment.
These reductions, coupled with the other actions taken to stabilize the business, resulted
in an EBITDA improvement from approximately ($500,000) to $3 million, on a normalized,
run rate basis.

After a lengthy regulatory and compliance approval process facilitated by the buyer and
the Receiver, the transaction was ultimately consummated as an asset sale to a publicly
traded provider of home care solutions.

The sale proceeds generated through the process, coupled with the cash balance on hand
that the Company generated throughout the case, were sufficient to pay the full principal
balance of the secured lender. The transaction yielded proceeds of approximately $19
million, or 6 to 7x prospective EBITDA.

With regard to this particular transaction, on June 24, 2019 The Turnaround
Management Association recognized Simon PLC, Receiver Frank R. Simon, Esq and John
W. Polderman, Esq. along with the entire Arcadia turnaround team for having
completed the “Small Company Transaction of The Year”. Learn more about this award

Note: Read Update of Receivership Case Studies published on February, 1st, 2022 here.  

Simon PLC Attorneys & Counselors is a full service financial institution and commercial litigation
law firm with its main office in Bloomfield Hills, 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.


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