2 Cal Plaza
National G.S.A Portfolio
HAI ADVISOR INC.
For Several Decades HAI ADVISORS INC.
Has served a multitude of significant clients and their service needs for Receivers, Receiverships, Bankruptcy Trustees, and Asset Managers for Real Estate related assets valued in the Billions of Dollars
Definition and duties of a Receiver
An archaic term, used in common law and Civil Law countries, to designate an individual who holds and conceals stolen goods for thieves. Currently an independent individual appointed by a court to handle money or property during a lawsuit.
Courts appoint receivers to take custody, manage, and preserve money or property that is subject to litigation so that when the final judgment is rendered, the property remains available to accomplish what has been ordered. The power to appoint a receiver is rarely utilized by the courts, and only upon a showing that it is required to preserve the property. Receivership cannot properly be used to coerce a party or to gain control of a business from someone who is capable of managing it. Receivership is an extraordinary remedy, designed to benefit everyone involved. It is, however, a harsh remedy, since it involves restraining an individual's property, removing it from his control, and causing additional legal expenses.
The appointment of a receiver, which is a provisional remedy to be exercised while litigation is pending, is ordinarily prescribed by statute, as are a receiver's powers. Ordinarily a receiver can be appointed only after a lawsuit is initiated. In a few cases a receiver can be appointed by mutual consent of all parties involved in a case.
A judge can appoint a receiver following the filing of an application, or petition, with the court. In certain instances, all those who are interested in a case join together, and in the event that the court has jurisdiction over the property and the parties, an appointment can proceed upon their consent.
An application for the appointment of a receiver is often submitted by a creditor. It might be Fraud or collusion for a debtor to have a friendly creditor nominate an individual the debtor chooses. A receiver generally should not be appointed unless notice is served on all interested parties and a hearing is conducted where a judge determines the merits of the case. On good evidence that an emergency exists, however, a judge can grant the petition for a receivership and hold a hearing as soon as possible thereafter.
A receiver assumes control of all the property subject to the receivership but does not take title to the property and cannot exercise control over property outside the territorial authority of the court. Any property that has already been transferred in a fraudulent sale designed to cheat creditors is beyond the reach of the receiver; however, the receiver has the power to initiate a lawsuit, requesting that the court set aside the transfer. Any rights, such as liens or mortgages, that others have in the property remain valid. Anyone in possession of property listed in the receivership order can be compelled to turn it over to the receiver. A refusal to comply, or interference with the receivership, is punishable as a Contempt of court.
A receiver does not represent the individual whose property is being administered, since the receiver is an officer of the court and is responsible to the court for protecting the interests of all opposing parties fairly. Where it is not clear how the receiver must perform his or her duty, he or she may properly apply to the court for instructions. He or she can be removed and held financially liable for failure to obey orders of the court, for neglect of duties, or for abuse of authority. The receiver must exercise judgment in fulfilling the duties, and her decisions must be reasonable. The receiver might be required to post a bond to ensure faithful performance of the duties and is required to account to the court at regular intervals for all the property entrusted to her during, and at the termination of, the appointment.
A receiver has a right to be compensated for services and to be reimbursed for costs or traveling expenses. In cases where it is necessary for the receiver to hire an attorney, counsel fees are allowed. To obtain compensation, the receiver submits an itemized report of services to the court. The amount of payment depends upon the extent and value of the property, the difficulties encountered, and the time spent, as well as upon the receiver's skill,experience, and diligence and the success of his efforts. The time and manner of payment are, for the most part, left to the discretion of the court; unless authorized by the court, it is illegal for the receiver to take payment money out of the property being managed.
Definition and duties of a Receivership
What is Receivership
Receivership is a process in which a legally appointed receiver acts as custodian of a company's assets or business operations, as with bankruptcies. A bankruptcy court, creditor, or governing body may appoint a receiver. In most cases, the receiver is given ultimate decision-making powers and has full discretion in deciding how to manage received assets.
BREAKING DOWN Receivership
A receivership provides a business with the opportunity to restructure and avoid liquidation through use of a court-appointed trustee, known as a receiver, to oversee business operations. The receiver assumes rights over the associated business's assets and properties and has the authority to cease dividend or applicable interest payments. The company's directors remain as material contributors, but their authorities are limited.
The enactment of a receivership allows a chance to review a failing company's practices. The receiver will work to restructure the company, manage the assets and obligations, and bring the company into a period of recovery. Under the authority of the receiver, certain assets may be liquidated. The goal of receivership is to protect threatened property and assets during legal proceedings and to return the company to a profitable state, thereby avoiding bankruptcy.
Other than receivership, the most common method to resolve a bankruptcy is through liquidation, which is the selling of all assets. The process of liquidation occurs if corporate restructuring will not salvage a company's operations. A court may order the liquidation of assets. This process involves selling the company's assets with oversight from a liquidator who acquires the funds to repay creditors. Upon completion, the company will cease to exist.
Some situations require a receiver to oversee operations while looking for a buyer of the business. The receiver ensures that all previous company operations comply with government standards and regulationswhile maximizing profits. For example, a company continued most of its standard operations while the appointed receiver worked to find a buyer. The companies receivership was necessary after the company failed to secure a buyer on the death of the primary shareholder.
Definition and duties of a Bankruptcy Trustee
What is a bankruptcy trustee?
Individuals and companies that file for bankruptcy under Chapter 7 or Chapter 13 of the U.S. bankruptcy code are assigned bankruptcy trustees. Under bankruptcy law, when a person or company files for bankruptcy, the court forms an estate to hold the bankrupt person’s assets and property. The estate is a separate legal entity and the bankruptcy trustee oversees the estate.
Bankruptcies are filed in federal bankruptcy court, and trustees work for the Department of Justice. The role of a trustee depends on the type of bankruptcy filed. The duties of a bankruptcy trustee in Chapter 7 cases include:
- Gathering property in the bankruptcy estate.
- Selling the bankruptcy estate’s property.
- Investigating the financial affairs of the person filing for bankruptcy.
- Challenging any creditors’ claims that appear to be incorrect.
- Distributing proceeds from the sale of property to creditors.
- Objecting to bankruptcy discharge when proper grounds exist.
- Furnishing information regarding the bankruptcy estate as requested.
- Filing a final account of the estate with the bankruptcy court.
The Role of the Bankruptcy Trustee in Chapter 7
Understanding the Trustee’s Role
The trustee receives a small fee for examining your paperwork, and a percentage of any assets sold. This payment structure gives the trustee incentive to carefully scrutinize the debtor’s property, including any property sold or transferred before the bankruptcy filing. Although the trustee must be fair to the debtor, their interests aren’t always aligned. Therefore, how much the trustee will be willing to help you—such as by answering your questions—will depend on the individual trustee.
Here are the primary duties of the bankruptcy trustee in Chapter 7 bankruptcy.
Reviewing the Bankruptcy Petition
Filing for bankruptcy involves completing a petition and other types of bankruptcy paperwork. In these documents, you’ll disclose personal and financial information about your debts, property, income, and the state of your financial affairs. Also, you’ll likely have to send the bankruptcy trustee things that will substantiate the information you provide in your paperwork, such as paystubs, tax returns, and information about your assets.
It is the trustee’s job to review your bankruptcy petition and verify the information and calculations using your financial documents and other independent sources. For example, if you state that you make $3,000 a month in your bankruptcy papers, the trustee will compare that against your paystubs to make sure the figure is accurate.
Examining the Debtor
Approximately a month after you file your case, you must attend the 341 meeting of creditors in front of the bankruptcy trustee. Although your creditors ask you questions during the hearing, unless they feel that you are hiding assets, creditors rarely attend these hearings. The bankruptcy trustee’s job is to conduct the hearing and ask you questions about the information contained in your bankruptcy documents while you are under oath.
The Chapter 7 bankruptcy trustee is also responsible for selling property that the debtor cannot protect, and distributing the funds to creditors. Here’s how it works.
In Chapter 7 bankruptcy, you can keep, or “exempt,” a certain amount of your property, such as household furnishings, clothing, and a qualifying retirement account. The particular assets that you can protect will depend on your state’s exemption statutes.
- When you have nonexempt property. Any nonexempt property—property you own that’s above and beyond the amount allowed by your state—will be sold by the trustee to pay your creditors. It’s important to determine what will happen to your property before you file for Chapter 7 bankruptcy. You don’t have an automatic right to dismiss your case, and many judges will not allow you to do so just because you didn’t realize the trustee would sell your property.
- When you don’t have nonexempt property. If there aren’t any nonexempt assets, the trustee will prepare a report stating your case is a “no asset” case and that there won’t be any distributions to creditors.
Sometimes the debtor and trustee disagree about the exemption status of a particular asset. In such cases, the bankruptcy judge will make the final determination.
Also, if you have property that you need to turn over, you—or your attorney, if you’re represented—will make arrangements with the trustee to do so.
Avoiding Certain Transfers or Security Interests
The bankruptcy trustee also has certain powers to avoid any preferential transfers or improperly executed security interests. If you transferred property to someone else or paid back certain creditors you prefer over others (such as family members) before filing bankruptcy, the trustee may be able to avoid (undo) these and get the money or property back to distribute it among all your creditors.
Similarly, if a creditor (such as a car company) did not properly create a lien or security interest on your property, the trustee can avoid that as well and sell the property free and clear of the lien.This situation is unusual and most likely to happen when a friend or family member is the creditor and fails to prepare the loan documents properly or fails to record the lien.
Definition and duties of an Asset Manager
An asset manager is a professional or company who administers the operation and ensures the value of one or more assets.
An asset manager may be a third party service provider who offers their services to outside clients. An asset manager may also be an in-house position within a firm that must manage its own assets in accordance with its own strategic business and investment objectives.
The asset manager is most commonly associated with the investment industry. In the investment industry, the asset manager's role is to maximize the value and yield of a portfolio of investment assets to achieve investor objectives. This may include the acquisition or disposition of assets to maintain the appropriate mix of investment assets to maximize the value of the investment portfolio.
Real estate, as an investment asset class, has placed greater importance on the asset manager's role in maximizing the value and optimizing cash flows of investment real estate. While property managers operate investment properties on behalf of real estate investors, asset managers ensure the maintenance and long term value and benefit of investment real estate.
Asset managers in real estate have many tools available to them to deliver results. Asset managers may advise on the acquisition and disposition of investment property to maximize the value of a real estate portfolio. Asset managers also ensure compliance and operations of investment real estate under the umbrella of strategic and long term objectives.