Receivership

In some situations, court appointed receiverships offer a better alternative to bankruptcy.

The appointment of a receiver has become an effective tool for secured lenders to utilize in order to protect their collateral. When it is apparent that a debtor is spiraling downward and is not cooperating or responding to the lender, an appointed receiver can take total control of the business and the pledged assets that serve as the lender’s collateral.

Often times, a “friendly foreclosure” is not an option. And bankruptcy can certainly be a protracted, costly, and cumbersome endeavor. A receiver has the ability to stabilize and rectify the company’s systemic degradation of asset values such as inventory and receivables. ATEC has served as appointed receiver in cases for over twenty-five years dating back to 1997. The benefits to the secured entities include, but are not limited to:

• Maximizes the net recovery to the lender and the unsecured creditors by realizing greater returns than a forced liquidation is capable of while minimizing the time & expense in doing so.
• Preserves all collateral while exit strategies are formulated and implemented.
• Most assets (Inventory, Receivables, and Intangibles) are worth far more when the business is operating in receivership than they are if the business has closed. Often times, products, product lines, or whole businesses are sold resulting in far greater recovery than the liquidation of all the parts.
• Operating expenses such as payroll, overhead, and material purchases are evaluated and immediately reduced where necessary to increase profitability or lessen the cash burn.
• Management reorganization can be implemented quickly.
• The receiver unravels any and all overlapping liens where multiple secured parties are involved.
• The receiver takes full control of the cash management of the business.

As receiver, ATEC stabilizes the supply chain in manufacturing or distribution businesses so existing orders can be completed to maximize inventory recovery and to maintain the integrity of the receivables. ATEC also reviews all operating leases, whether its machinery and equipment or lease agreements with landlords in order to stabilize the infrastructure of the business. In all cases, ATEC evaluates the business at hand and the assets pledged as collateral. From there, a workout or exit strategy is determined in order to maximize the recovery for all creditors.

Sometimes the value of the inventory and the receivables are enhanced if production continues in order to complete orders while maintaining the "sell" price for the goods. This also helps secure the collectability of the receivables when key customers are able to obtain the goods or services they contracted for. In these cases, ATEC will create operating budgets that compare the ultimate recovery versus a liquidation of the assets as they see fit. This information is provided to all parties involved in the receivership outlining the net recovery and that the maximum value of the assets can be realized. The key element in all of ATEC's receivership experiences, in that management and control is quickly realized, which protects the company's assets by suspending the downward spiral.