A receiver is someone who is appointed by the court to handle a property that is the subject of litigation. In the hotel business, for example, a lender might come after an entrepreneur who used the hotel he owns as collateral but has failed to repay his debt. In this case, both the lender and the hotel owner have interest in the property, but neither of them are the true owners of it while the litigation is still underway. Because of this, the property may undergo hotel receivership if the court decides the appointment of a receiver is best to take care of the business for the meantime.
Petitioning for a court-appointed receiver can provide several benefits. These include:
Forcing parties to take action
In many cases, business owners don’t feel compelled to take action unless their lenders take drastic steps. Because of this, it’s up to the lenders to show the borrowers that they mean business and won’t hesitate to bring the matter into court. One of the best ways to do this is to petition the court to appoint a receiver. When this happens, business owners have no choice but to take action and get their own legal counsel if they want to oppose the petition.
When a hotel is put into receivership, its owners no longer have the authority to manage it since this authority is transferred to the receiver. This can be daunting for the owners since they would inevitably lose control of their business. This, in turn, spurs them to reach settlement with the other party just to ensure that they would stay in control of their hotel.
Saving time and money
In many cases, the act of petitioning for receivership encourages both parties to achieve a settlement, and this helps them save time and money. Creditors will be able to recoup the amount that they’ve lent to the business owner. The two parties then won’t need to go through the expensive and time-consuming process of litigation.
Protecting the property involved
When a hotel is involved in litigation, it usually falls into disrepair if no one takes care of it. This turns a perfectly usable property into one that requires extensive repairs and renovations to get back into good shape. Of course, it turns a perfectly lucrative business into one that no longer earns money. Receiverships can prevent this from happening by ensuring that someone will always be there to manage the hotel. It’s important to ensure it continues to produce a steady stream of revenue.
Improving the business as a whole
A court-appointed receiver brings a fresh perspective and an objective point of view on how to run the business. Once the final judgment is made, a receiver can give tips on how to manage the business in better ways.
These are just some of the benefits offered by a receivership. If you need more info, get in touch with Perry Group International for a no-cost consultation. We specialize in hotel receivership management and can help you learn more about this service.
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