Receiverships

Mitigate Potential Losses and Resolve Financial Disputes

When a business defaults on a loan, it impacts everyone involved—most notably secured lenders and other creditors. To mitigate potential losses and resolve the situation, banks and secured creditors will apply to court for the appointment of a Receiver to take control of the borrower’s business and to maximize recovery of their loans.

We have extensive experience acting as Court-Appointed Receivers, helping secured creditors recover outstanding amounts under secured loans. The Receiver’s powers include the ability to secure assets, operate the business, liquidate assets or sell the entire business as a going concern. Often, a purchaser who wishes to acquire a distressed business will want to do so via a receivership or CCAA/BIA proceeding, so they get a vesting order from the Court to ensure that they get the assets free and clear of liabilities.

Receiverships are also a useful tool to resolve complex disputes. In shareholder and other business disputes, the receiver can act as the independent Court Officer who maintains stewardship of the business, sells the business and unravels complex financial analysis which it reports to the parties and the court.

How Receiverships Work

A Receivership can be initiated in one of two ways—either by way of a Privately-Appointed Receivership or a Court-Appointed Receivership. A private Receivership is more cost-effective but is seldom used as a remedy.  In more complex situations, secured creditors will apply to court for the appointment of a Receiver. Other advantages of a Court-Appointed Receivership include: a stay of proceedings, which provides immediate relief from creditors, vesting orders for purchasers and a court approved funding mechanism.

However, appointed, the Receiver’s role is to take possession of, and sell or liquidate, any relevant assets or the business, with the intention of repaying the outstanding debt. The Receiver has responsibilities under the Bankruptcy & Insolvency Act, which include notifying all creditors of the Receivership and providing regular status updates to the official Receiver and the court.

A Business-Minded Approach

Like all our engagements, we approach Receiverships through an entrepreneurial lens—and strive to uncover the best path forward for all involved. This often involves delving a little deeper, understanding the root causes of a business’s financial set-backs, and finding a solution that maximizes the lenders’ or creditors’ returns and achieving the optimal business outcome, which may include preserving jobs.

Interim Receiver Role

GlassRatner (formerly B. Riley Farber) has been retained in numerous court appointed interim receiver roles, with powers provided for in a Court order. These can range from a strict monitoring and reporting role over a company’s assets and affairs to broader powers contemplating exercising control over a business and its cash management, until such time as further order of the court is granted. As the name suggests, these appointments are normally provided for a limited period.