Receivership and Distressed Businesses
Kevin Whelan is the President and CFO of The Beverley Group based in Rocklin, CA. Kevin acts as a Receiver when a business is distressed and the current owner is no longer able to run the company.
Kevin explains that generally a Receiver is inserted in various legal disputes by a judge to work as an officer of the court. He says Receivers are independent 3rd party representatives of the court that work to protect and preserve assets while there is a dispute going on. Kevin mentions examples of Receiver situations from real estate to marriage disputes. In noting a particular real estate story, Kevin notes that lenders are frequently not fully aware of what is going on with their properties. He says often proper insurance on a building is not active and this is something he in the past has been able to resolve in his role as a Receiver.
Receivership in business and a Trustee
Kevin talks about the distinction between a Receiver and a Trustee. He says typically a Receiver deals with state work and takes a custodial interest in the assets they are working on. He says a trustee typically deals with bankruptcy scenarios and plays a slightly different role.
Kevin also talks about what it is like to come into a business following a court order and interact with the business owner. Kevin says it is quite surprising some of the improvements to a business that can be made by a Receiver once the “umbrella of a legal dispute” is not hovering in the office all the time. Kevin also discusses how the court handles compensating Receivers.
Kevin and I also spend some time speculating on the current market given his perspective as a Receiver. He says they still get a lot of calls in equity cases in small businesses, which proves that the economy is not entirely healthy at this point and still has a ways to go. Kevin and I agree that the economy is better than a few years ago, however is improving quite slowly.
If you would like to hear my conversation with Kevin Whelan, please click here.