Choosing a Court Appointed Receiver

Having a court appointed receiver take over restaurant management can be daunting. While you have a chance to nominate someone, the receiver is a neutral third party who does not answer to you. On the other hand, the right person will manage a property efficiently and ethically, using expertise that you may not have. You also need to ensure the person understands the industry; operating a restaurant brings different challenges from running other kinds of businesses, so you need someone prepared for the unique difficulties he or she will face. Vet carefully before agreeing to someone so you know it is the right person to manage your property.

Experience in Asset Management

The first goal of a court appointed receiver should be to maintain or improve the value of the property in question. With this in mind, you should look into the receiver’s experience in managing assets. This experience can include any active management, whether as a receiver or as the manager of a restaurant. Look into the performance of properties the receiver has managed, to determine whether he or she delivered effective, lasting results. If the receiver’s record shows a focus on selling off assets individually, this may not be the right fit for maintaining the overall value of a restaurant. On the other hand, evaluating assets and enhancing the business value can show the kind of expertise that allows a failing restaurant to thrive over time.

Experience in Your Industry

Different industries require different experience. If your court appointed receiver has worked in a retail or other business environment, he or she may not be prepared for the unique challenges that a restaurant brings. Similarly, someone with no experience in the region where the restaurant sits might struggle to adjust to the nuances of operating a restaurant with your local clientele.

This is where you need to dig deeper into the types of businesses a court appointed receiver has managed. A restaurant’s assets have particular and specific uses. You need a court appointed receiver who understands how your equipment fits into the kinds of foods prepared there, how the safety and health regulations and standards fit in, and how all of that affects the value of what you have. The receiver’s focus is on values and numbers, but you need someone in place who understands how all of the parts affect the value of the business.

Financial and Competitive Conflicts

The flip side of experience in your area is the potential for conflicts. A court ordered receiver must be truly neutral–not just in terms of relationships with the restaurant owner or creditors, but to the overall competitive landscape. The more restaurant experience a court ordered receiver has, the more potential he or she has for interests in a competing restaurant or chain. If someone has worked for one of your competitors, you should look deeper into what experience that is, and what continuing interests the person may have. Experience with competitors does not always create a conflict, but a continuing relationship probably would.

Beyond overt conflicts, a court ordered receiver may own stock or retain other financial interests in the industry. The world is shrinking in many respects, so the reach of this kind of conflict may extend well beyond your local area. Any interest in another restaurant deserves a closer look before you agree to work with that receiver. This is an area where, even if the receiver in question provides work that is above reproach, the appearance of a conflict can lead to litigation down the road. If you vet for any potential conflicts, you have a better chance for a smooth transition for the restaurant.

Vet Receivers Carefully

The right court appointed receiver can greatly enhance the value of a restaurant. Anyone can look up values of assets and sell them for good prices. To get the value of deep experience and integrity gives the ability for a failing restaurant to turn around, delivering on the needs of the owners and their creditors. Take your time to identify the right person, a neutral party with experience in your industry and experience in asset management.