Is Receivership the same as foreclosure?

RECEIVEREI

No.  Receivership is an alternative to foreclosure, and for reasons spelled out in the “Receivership vs Foreclosure” section of this website, the receivership option is growing in popularity.  There may be cases where the foreclosure could continue while there is a receivership in place.

How is bankruptcy different from receivership?

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Bankruptcy is federal.  Therefore, the bankruptcy laws are the same for all 50 states.  It is a well-defined process.  Receivership is a state law and, therefore, it can be different from state to state.  A debtor has the option of voluntarily requesting a receiver be appointed and some of the reasons the debtor might choose receivership over bankruptcy is that it is less expensive, faster and the debtor has more control than in a bankruptcy.  This receivership is referred to as “ABC” – Assignment for the Benefit of Creditors. In an operating business, a receivership may have a less negative impact than a bankruptcy filing would have, especially with customers, employees and suppliers.

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Who pays for the receiver?

Typically the business or property, over which the Receiver has control, generates enough income to pay for the receivership. Sometimes the Receiver is paid from the proceeds of the sale of the receivership property.  Otherwise, the lender pays and is typically reimbursed at the close of escrow.

How much does it cost?

As you would guess, it varies dramatically depending on the complexity of the case.  MSI bills out its staff on an hourly basis ranging from $65/hr to $250/hr. and the company seeks to have the lowest paid qualified staff member handle any given task.  Typically the highest expense months are at the beginning and when the property sells.

How long does it take to have a receiver appointed?

It can be done in less than 30 days.  In extreme cases, it can be done in less than 10 days. The normal process, however, is for the lender’s counsel to draft the documents in order to have the Receiver appointed.  The hearing appointment follows reviews by the receiver and filing with the Court and circulation to the debtor and related parties.  In nearly every case, the hearing results in the appointment and the Receiver may take immediate possession of the Receivership asset, per the terms of the Court Order.

What are the qualifications necessary to become a receiver?

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Technically the qualifications are minimal---must be over 18 years of age, never have been convicted of a felony, not a party to the case nor have an adverse interest nor be a sheriff! Practically speaking, the successful receiver must have a long and broad history of business management experience and an abundance of common sense and good communication skills.  Most successful receivers have knowledge of the law, specifically as it relates to receivership law.  In the State of Washington, this is embodied in the RCW (Revised Code of Washington) Chapter 7.60.

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Can we talk to some other lenders where McCallen has been appointed?

Sure. Just ask.

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How do you protect confidential information?

All information provided by lenders is held in strict confidence.  As an Officer of the Court, the Receiver is held to a very high standard of behavior and ethics.  McCallen takes this responsibility very seriously and every staff member is keenly aware of this responsibility.

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Where do you operate?

While based in Washington, McCallen has also handled receivership duties in California, Oregon and Idaho.

Why is receivership growing?

As more and more lenders and attorneys become familiar with the many obvious benefits of receivership over foreclosure, especially the speed and cost, they are opting for receivership. Lenders that have used it tend to opt for receivership again and again.

Is Receivership different from state to state?

Yes.  Some states have more well defined receivership statutes than others.  Washington State receivership law is well defined and outlined in the RCW 7.60. A growing number of judges are becoming familiar with it.  On the other hand, Oregon’s receivership law is less defined.  The result is often more hearings and time in front of a judge.  It is critical for a lender to be represented by counsel who has substantial receivership experience.

What’s the difference between a “General” vs. a “Custodial” Receiver?

While there are many differences, the main ones are that a General Receiver has broader authority, including an inherent right to sell the property; a Custodial Receiver is appointed to collect rents and has more limited duties.  The majority of McCallen receiverships are General.