SOS often serves as a court-appointed Receiver. This is basically where a company or assets are turned over the State. The State court system then appoints a master to manage those assets for the benefit of the stakeholders. There are generally three types of Receiverships—General, Custodial, and Special. The General Receiver has broad general power to acquire title, operate a business, or dissolve a business. Custodial is assigned to simply take care of the assets entrusted to him or her. A Special Receiver most often simply oversees disbursements or manage an issue in dispute. The advantage of the Receivership process is that all stakeholders generally cooperate with an officer of the court as they appreciate a third party’s unbiased professional management. A Receivership is often an excellent alternative to the filing of a bankruptcy—be it a liquidation or an operating bankruptcy. It is often faster, cheaper, with a greater flexibility, while retaining court oversight and protection. The Receiver may not have the powers of a bankruptcy if the creditors do not cooperate and based on different state laws. SOS has served in simple voluntary receiverships where company sales were very low.
Receivership Case Studies
Used Oil Everywhere
The most intensive Receivership that SOS handled involved a national oil-filter recycling business that created EPA issues throughout the United States. It involved polluted real property, two dozen railcars that carried oil sludge and oil filters around the nation. It also included approximately 1,700 dumpsters throughout the United States that were in various states of being filled with used oil filters, oily water, & sludge.
A Pickup, a Trailer, and some Hand Tools
Receiverships are perfect for small companies. In fact, most small businesses cannot afford the cost of a bankruptcy. The smallest Receivership of SOS’s involved a small company which placed rebar in concrete construction items. SOS basically transferred the failing company’s assets into a new company and then set up payments for the new company to pay a part of the debt of the predecessor company. This was seen by the creditors as the best solution. The Receivership brought a fresh start for the owner with a realistic payment stream for the creditors.