What Is Receivership In Commercial Real Estate

A commercial real estate receivership is put in place for several reasons, including when a company is going through foreclosure, bankruptcy, breaches in fiduciary duties, or to protect the creditors' interests. A real estate receivership differs from foreclosure or bankruptcy due to the primary objectives of each legal process. A receivership is put in place to preserve the value of the specific collateral, such as a commercial building, and maximize recovery for the creditor, often by continuing business operations.

A foreclosure is put in place to allow the lender to take ownership of the property and sell it to satisfy the debt. A bankruptcy is put in place to resolve the borrower's overall debt situation, either through liquidation or reorganization, providing the debtor with a fresh start. A real estate receivership is put in place for neutrality, managing a business for the benefit of all parties involved, for asset preservation.

When A Commercial Receivership Is Initiated

Common triggers for commercial receiverships might be financial distress, operational failure, disputes, and more. The court is responsible for appointing a custodian to manage the property and other financial assets that are in distress. The appointment of a receiver is necessary to rectify the financial issues your company is facing from a third-party perspective.

To protect the value of your business, appointing a receiver would be the best option. A foreclosure or bankruptcy will not preserve the value of your business or protect the interests of the creditors. A receiver is a stabilizing force put in place to navigate the troubled waters of your real estate investment.

Managing Assets During Receivership 

Day-to-day asset management that takes place during a real estate receivership consists of overseeing routine and emergency maintenance on the real estate property, managing all aspects of tenant concerns, negotiating leases, and more. Receivers will focus on preserving the property value, ensuring all regulations are followed, as well as court orders.

Receivers will prioritize stabilizing operations that will improve the physical and financial state of the property. They might have to consider restructuring, refinancing, or other legal decisions that will protect the asset's value. Receivers will limit risk mitigation by developing strategies before a risk can form. When you’re going through the receivership process, coordination amongst property management, the receiver, and the advisory team will yield a positive outcome.

How Intelica Supports Commercial Receivership

Intelica applies a multidisciplinary approach across commercial receiverships, property management, and advisory. With Intelica, you’ll experience a goal-focused technique that targets the future of your business, with an emphasis on court-ready reporting.

Intelica is a trusted partner for lenders, courts, and ownership groups. Contact Intelica today for support with your commercial real estate receivership.