How to Get a Receiver Appointed


A recent article in the Daily DAC, a newsletter focused on corporate insolvency, discussed the above-referenced topic.

And while it made several interesting and educational points, the writer was based in Minnesota, and the article demonstrated the importance of understanding the issues and ways of getting a receiver appointed according to the rules of the state where the receivership is being requested.

Receivership laws are different in each state, and Minnesota law, while having some commonality with Washington law, is also very different in a number of respects.



For example, the article begins by stating Receiverships are most often commenced by creditors, but they can be commenced by an equity holder as well.

The first step towards a receivership is to initiate a lawsuit.

Most commonly, the lawsuit is filed for breach of contract and is seeking foreclosure or repayment of collateral. Appointment can also be sought as an independent action but is less common.

In Washington, this would not be the case. Many receiverships are initiated through the process of an Assignment for the Benefit of Creditors.



This process, while separate from a receivership, allows a company to initiate the insolvency process itself without either a lawsuit or court process. Once the assignee accepts the assignment, it is the assignee that initiates the receivership.

The article goes on to state that the next step is to bring a motion for the appointment of a receiver. It suggests that to maintain a good relationship with the lender, it’s a great idea to seek a mutual appointment.

It’s important to note that where an assignment for the benefit of creditors is used in Washington, the assignment is required to be on behalf of all the creditors.

Section 7.08.010 of the statute states: No general assignment of property by an insolvent, or in contemplation of insolvency, for the benefit of creditors, shall be valid unless it be made for the benefit of all of the assignor’s creditors in proportion to the amount of their respective claims.



Once converted to a receivership, the receivership statutes in Washington state the order and priority of the payments made by the insolvent estate.

Lenders with contractually secured UCC filings have the highest priorities, followed by other creditors with UCC filings. Where there are conflicts, the priority is established by the date of the UCC filing.  Following these priorities come unsecured debt (trade debt) and lastly equity.

This particular article stresses the way to get a receiver appointed in Minnesota and deals with the legal actions necessary in that state.

In Washington, some statutes are similar to other states, while there can be significant differences. When doing internet searches, especially related to insolvency and state laws, it is important to focus on a number of factors related to the decision.

The state of Washington has, what are considered to be, some of the strongest receivership laws in the country.



A major decision is if a federal bankruptcy or state receivership is the right decision for your organization.

To make that decision, be certain that the attorney you select has experience in both processes.

Make certain that your attorney can explain which process is best for the company and for you personally.

While moving from a receivership to bankruptcy is relatively straightforward, going in the other direction is highly problematic.



Another issue is affordability. The federal process is generally more expensive than a state receivership due to certain costs mandated in the bankruptcy code.

A qualified assignee/receiver will make certain that funds are available or will become available during the process.

If funding does not become available, it is a relatively easy process to terminate a receivership.

Federal bankruptcy statutes provide solutions for dealing with a lack of funding which are more complex.



Lastly, it is important to select an assignee/receiver that you can work with as the process moves forward.

The objective is to maximize the returns from the estate to the creditors.

The debtor is represented by counsel, the secured lender is most probably represented by counsel.

Some trade creditors and those owing the estate have counsel.

Each of these is seeking the best returns for their particular situation.

Knowing that your selected assignee/receiver has the experience to manage the various parties and can work with you to maximize the returns in accordance with the statutes, will provide the most piece of mind in what is always a stressful situation.

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, a State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Tales from the Receivership Trail – Chapter 3


While Revitalization Partners (RP) continues to see an increase in the number of inquiries related to distressed companies and receiverships, we have also seen an increase in receiverships occurring as a result of partnership disputes.

The significant difference between receiverships relating to distressed companies and those that have partnership disputes is that partnership disputes are typically solvent companies, are profitable and are consistently generating cash flow.

The receivership is typically originated by a judge or a business partner that has expressed grievances against their partner for alleged mismanagement, fraud, or other misbehavior that they are unable to control.



In light of this, we thought we would share another story as part of our ongoing series “Tales from the Receivership Trail” reflecting our experience serving as court-appointed receivers for a company that had encountered disputes between operating partners.

RP was referred by a trusted resource to one of the partners of the company (LLC) that manufactured compost and sold the product to gardening stores and wholesale gardening companies.

The company was organized as a limited liability company and was owned 50% by one family (A) and 50% by another family (B). The LLC was a member-managed LLC and was managed by family B.



There were a number of complicating factors relating to the operations of the business as both families had outside business interests that were doing business with the LLC.

  • For example, family A sold raw materials to the LLC for the purpose of manufacturing compost.
  • Family A also owned two companies that purchased composite material from the LLC to sell independently to other companies.
  • Furthermore, family A leased heavy equipment to the LLC. Finally, family B owned the land that the LLC operated on and leased the property to the LLC.



Obviously, both families had conflicting interests as it related to the operations of the LLC, and that set up several critical areas where any conflict between the members could seriously jeopardize the operations of the LLC.

During the period preceding the receivership, the LLC was profitable, however, a series of actions were taken by both families that ultimately jeopardized the solvency of the LLC.

One example of this was the fact that accounts receivable from companies owned by family A were not paid on a timely basis, thereby causing a reduction in cash flow.

This resulted in the LLC delaying payments to a second company owned by family A as well as being late paying rent due to family B.

Given that one of the companies owned by family A provided the LLC with the raw materials for the compost material as well as being the purchaser of the finished compost material from the LLC, family B stopped accepting raw materials from the company managed by family A, which effectively shut down the operations of the LLC and jeopardized its ability to continue operations and pay its debts.

Finally, the LLC’s secured lender declared a default because of a cross-default provision in the loan agreement on any other loan held by the secured lender for either of the families.

Family A defaulted on one of the unaffiliated loans and the secured lender subsequently declared a default on the LLC.



As a result of these issues, family B asked the court to appoint a receiver to control the assets of the LLC and continue operations. After being appointed receiver of the LLC, RP immediately took control of the operations and the books and records of the company.

RP’s main objective was to continue operations of the LLC and to sort out the differences between the two families as well as to resolve those conflicts to the satisfaction of the court.

Given that RP acting as the receiver was an independent third party, we immediately took action to resume operations of the LLC, began accepting raw material from family A and worked with family B to continue to operate the business.

Another immediate priority was to meet with both families to understand the source of the various conflicts and to develop a plan that would be acceptable to the court and both families as well as the secured lender.



Once operations recommenced, the LLC was able to generate positive cash flow and to pay its expenses in a timely fashion.

Concurrently with stabilizing operations, RP met with the families and gained an understanding of the source of their grievances and developed a plan to deal with them.

Given that family B had attempted to purchase family A’s interest in the LLC prior to the receivership, we determined this was most likely the fastest path to resolving the dispute.

After several months of negotiations family A agreed to sell their LLC interest to family B. After the agreement was executed, the receivership was terminated by the court and family B took over operations of the LLC.

The secured lender’s default was also resolved because of the sale of family B’s purchase of family A’s interest in the LLC and as a result, the LLC was no longer in default.

RP was able to resolve the disputes and terminate the receivership within three months of being appointed.



If there are any lessons to be learned from this story, other than making sure you know who you are entering into a partnership with, it would be to avoid entering into a 50%/50% voting agreement with an LLC without some independent checks and balances being interjected into the process.

Also, avoid entering into an LLC agreement where there are any outside interests that have the potential to cause a major disruption to the business.


Also, if a major dispute does arise in a business, make sure that an independent advisor is brought in quickly to help sort out the issues, prior to reaching a level of insolvency and the ultimate demise of the business.

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, a State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

The Time is Right for Asset Based Lenders


The pullback in total lending in the last half of March was broad and included fewer real estate loans, as well as fewer commercial and industrial loans.

Furthermore, the American Bankers Association index of credit conditions fell to the lowest level since the onset of the pandemic, indicating bank economists see credit conditions weakening over the next six months.

As a result, banks are likely to become more cautious about extending credit.



These issues will most likely result in a significant number of borrowers needing to look for new lenders. 

Borrowers that cannot obtain credit facilities from traditional lenders will be searching for viable alternatives such as bank and non-bank asset-based lenders that are in a better position to handle their credit requirements.

This opportunity is further supported by a fourth-quarter 2022 survey of bank and non-bank ABL lenders by the firm Secured Finance Network (SFNet), which focused on key indicators for its quarterly Asset-Based Lending Index and SFNet Confidence Index.



The survey showed steady confidence in the asset-based lending market and asset-based lenders maintained a positive outlook despite persistent inflation and rising interest rates.

“As the U.S. economy remains under stress, the asset-based lending industry is primed to meet new demand,” said SFNet CEO Richard D. Gumbrecht. He continued: “Commitments have increased, and portfolio performance remains solid. Should we see a recession, the ABL industry stands ready to provide vital working capital.”

The SFNet survey also revealed some interesting comparisons of bank and non-bank asset-based lenders.

For banks, asset-based loan commitments (total committed credit lines) were up 2.4% in the fourth quarter compared to the previous quarter.

However, their outstandings (total asset-based loans outstanding) for the same time period fell by 1.6%.

Lower new commitments and higher commitment runoff reduced net commitments in Q4, the second consecutive quarter of decline.



Non-bank ABL lenders, however, saw total commitments rise by 6% last quarter. Total outstandings were up, as well, by 1.7%. Compared to the same quarter last year, total commitments and outstandings for non-banks rose by 10.4% and 18.6% respectively.

The SFNet report stated: “Further, a large majority of non-banks reported increased new commitments in Q4, which grew by 277% from Q3” which is an indicator that non-bank lenders have a significant advantage in expanding their loan portfolios.

This substantial increase in non-bank asset-based lender commitments reflects the reality that they have an edge in attracting new borrowers as they do not have to face the same regulations that bank-based asset-based lenders are bound by.

They are allowed to take more risks in lending by increasing advance rates on traditional assets such as accounts receivable and inventory, as well as expanding the collateral pool to non-traditional ABL assets such as trademarks, real estate and a broad range of equipment.



Utilizing non-bank ABLs offers an opportunity for businesses to increase their borrowing capacity, a necessity for increased liquidity to operate a business.

However, it comes with a price, as they also have substantially increased costs related to higher interest rates, collateral monitoring fees and other related expenses.

There are a wide range of options for small to medium-sized business borrowers to consider when looking for an asset-based lender and it’s important to make sure that they consider a lender that is best for their business.

It’s also important to negotiate a lending arrangement that is for an appropriate length of time, to allow for management to implement a game plan to improve their business as rapidly as possible.

This will enable the business to become “bankable” again with a traditional commercial bank lender to reduce their overall borrowing costs.



While the time is right for asset-based lenders to substantially increase their loan portfolios, the economy will eventually improve, and businesses’ performance will recover to pre-pandemic levels as well.

Asset-based lenders should prepare for this and offer options that will substantially lower the borrower’s costs when this economic shift occurs, in an effort to retain the businesses for the long run.

And, if companies need help in navigating the asset-based lender landscape, don’t be afraid to ask.

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, a State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Lessons from the Silicon Valley Bank Failure for Non-Financial Companies


As you may know, we often publish articles from guest writers.

This article was written, not by a person, but by Chat GPT, an artificial intelligence system.

At the end of that writing, one of the experienced humans from Revitalization Partners will add some of the issues related to the title of this article that were missed by ChatGPT.



The failure of Silicon Valley Bank (SVB), a leading financial institution, in 2023 has brought about important lessons for non-financial companies.

The collapse of this institution has highlighted the importance of risk management, corporate governance, and financial transparency.

In this article, we will discuss the lessons that non-financial companies can learn from the SVB failure.



Risk Management: Non-financial companies need to have a robust risk management system in place. This includes identifying and assessing all the risks that the company faces, both internal and external.

Companies should also have contingency plans in place in case of a crisis.

SVB’s failure was attributed to poor risk management, which led to the accumulation of significant credit and market risks that eventually led to its downfall.

Non-financial companies need to learn from SVB’s experience and ensure that they have a comprehensive risk management framework that includes regular risk assessments, scenario planning, and stress testing.



Corporate Governance: The importance of strong corporate governance cannot be overstated.

Non-financial companies need to ensure that their boards of directors are independent and have the necessary skills and experience to oversee the management of the company effectively.

Companies should also have robust internal controls to prevent fraud and misconduct.

The failure of SVB was attributed to poor corporate governance, which allowed the management to take excessive risks that eventually led to the bank’s collapse.

Non-financial companies need to ensure that their boards of directors are vigilant and proactive in overseeing the management of the company and ensuring that they adhere to high ethical standards.



Financial Transparency: Financial transparency is essential for building trust with stakeholders.

Non-financial companies need to ensure that they have accurate and timely financial reporting that is in compliance with accounting standards.

Companies should also have a clear and transparent communication strategy with their stakeholders, including investors, customers, and employees.

SVB’s failure was partly due to poor financial transparency, which led to investors losing confidence in the bank.

Non-financial companies need to ensure that they have a clear and transparent financial reporting system that provides stakeholders with the necessary information to make informed decisions.



Regulatory Compliance: Non-financial companies need to ensure that they are in compliance with all relevant regulatory requirements.

Companies should have a robust compliance framework that includes regular monitoring and reporting to regulators.

The failure of SVB was partly due to non-compliance with regulatory requirements, which led to penalties and fines.

Non-financial companies need to learn from SVB’s experience and ensure that they have a robust compliance framework that is regularly reviewed and updated.

In conclusion, the failure of SVB has brought about important lessons for non-financial companies.

Companies need to ensure that they have a robust risk management framework, strong corporate governance, transparent financial reporting, and regulatory compliance.

These lessons highlight the importance of building trust with stakeholders, including investors, customers, and employees, which is essential for the long-term success of any company.

Non-financial companies need to learn from SVB’s experience and take proactive steps to ensure that they are well-governed, financially transparent, and compliant with all regulatory requirements.



Now for some human comments. Other types of issues that were unaddressed in the AI-written article are:

Customer Concentration – One of the other failures of SVB was customer concentration. Not of a particular customer, but of a customer demographic.

While this can often be helpful at a strategic level, the failure to forecast changes in that demographic and the effect that these changes could have on a company can be critical.

Vendors – A company may have an overreliance on a vendor whose failure would cause major disruption to your operations. This is particularly relevant to large vendors who provide a suite of services.

Assets – A reliance on a single type of major asset (such as infrastructure, IT hardware etc.) could become problematic if they suffer a systemic failure.

Geographic – While this is a typical concentration risk for financial firms (such as insurer and credit provider exposures to damage property or changes in property values), it can also apply to non-financial firms. Natural disasters or other localized events may have a higher impact on organizations that don’t have secondary locations or a distributed workforce.

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, a State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Leadership in Times of Crisis


There has been no shortage of events over the past several years that have resulted in companies coming under extreme financial pressure due to circumstances beyond their control.

Those events range from the COVID crisis, to rising interest rates, the threat of a looming recession, and the recent bank crises related to Silicon Valley Bank, as well as several other banks that have either failed or required bailouts.

Some of the “crisis” events occurred rapidly, almost overnight, while others could have been somewhat anticipated and perhaps mitigated with the appropriate interventions.

While many companies had the management talent or were just plain lucky to figure out how to survive these pressures, many others lacked the experience or the outside-of-the-box thinking to survive in the face of a rapidly changing business environment.

As a result, numerous companies either failed, or continue to limp along without the financial resources necessary to manage the business as a going concern. These businesses will most likely eventually fail as well.



Managing through crisis situations requires a leader who can evaluate the situation and quickly develop a plan to cope with the crisis at hand.

Sometimes crisis situations can be anticipated and planned for, however, many times they happen overnight without adequate time to prepare.

In either situation, leaders and their management teams must be able to quickly understand and start to define the crisis in order to attempt to deal with the issues. Furthermore, dealing with a crisis is not a cut-and-dried situation.

The plan developed initially, is only as good as the day it’s written. In crisis situations, it’s hard to determine how long it will last and how many ongoing variables will occur that will require frequent modification to any initial plan.



One of the most effective ways of dealing with a crisis is to proactively develop a structured and systematic approach to crisis management that identifies certain types of potential crises and how the company might respond.

Using the talent and experience of the company’s leader and management team to identify and brainstorm around several types of crises that could occur would go a long way in developing an outline of what should be done in the event a particular crisis occurs.

While it’s difficult to anticipate every type of crisis that could occur, laying out a game plan for several possibilities will serve to provide a framework for dealing with an unanticipated crisis, if, and when, it occurs.



Proactively developing a crisis management plan that involves the management team is only a portion of what is required to manage a crisis.

When a crisis does occur, it’s important for the company’s leader, typically the CEO, to take charge of the situation and develop a “war room” mentality to start to deal with the crisis at hand.

Taking charge and leading the team through the process of identifying the issues and impacts and developing tactics and strategies to begin to mitigate the damage to the business is extremely important.

It’s essential for the leader to project honesty and confidence throughout the process. During a crisis, everyone looks to the leader for the next steps and to some degree a level of reassurance that they are in control.

If the leader projects fear and unease, then any plan that is proposed will be questioned or doubted.

While there may be a tendency for a leader to tell everyone that “everything is going to be okay”, it’s important to be realistic in communicating the issues and what steps management is taking to deal with the crisis. Frequent communications related to where the company is at in dealing with the crisis and what progress is being made toward dealing with it are also very important.



It’s also important for the company’s leader to be decisive yet adaptable.

A crisis situation is one of the few circumstances where leaders must be able to make quick decisions and often in a very short timeframe.

Leaders need to be able to make decisions on the fly, and in some cases, they might need to make the hard decisions even though they may not be popular ones.

There is no time to ponder the pros and cons of a decision at a leisurely pace.

Leaders who take action, who are decisive, and who are open to adapting their decisions to suit the needs of a situation, are going to have more success weathering a crisis than a leader who chooses to wait and not take action.



While making decisions quickly is a mandate in a crisis situation, it’s imperative that a leader does not throw caution to the wind and risk it all, unless there is truly no other option.

Leaders must be able to rapidly make decisions, however, in a measured way.

In other words, quickly evaluating all the facts at hand and then making a calculated decision about what would be the best course of action helps take some of the risks out of the fast-paced decision-making process.



The leader should make sure to involve the entire management team in the process, as obtaining a consensus view of the facts at hand and the resultant decisions that must be made, will mitigate some of the risks in executing the plan.

While this all might seem like an impossible task, in actuality, this is a habit and a process, that can be cultivated over a period of time.

Staying positive yet being realistic throughout the crisis is also an important attribute of the leader. However, this is one of those things that is easier said than done. it is important to keep a game face on until the worst of the crisis has passed. Projecting a positive attitude, while defining realistic expectations will go a long way in creating confidence throughout the company.

Yet even the best leaders may not be equipped to handle every crisis. If you determine that a crisis is outside your scope of experience or background, there is always help available.

Don’t ever hesitate to seek help if you or your advisors believe you need it.


Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Dealing With a Business Continuity Crisis


Over the past 20 years, Revitalization Partners has worked with hundreds of businesses in helping them solve complex business problems and improving the operating results of their companies.

In a number of cases, the business has fallen on tough times as a result of a business continuity crisis related to the death of a founder/CEO, or when a business leader has become incapacitated for one reason or another.

However, a business continuity crisis does not necessarily always originate when a founder/CEO unexpectedly passes away.

In our experience, we have seen many different types of situations that have negatively impacted a business.


In one situation, there was a risk-taking CEO that was relying on a strong CFO to ensure that he made sound business decisions.

The CFO had a long period of illness and eventually passed away. 

As a result, the high-risk-taking CEO was left unchecked.

Since there were no checks and balances or financial analysis of the risks that the CEO was taking, the CEO took too many risks and incurred substantial losses as a result.



In a different situation, a founder/CEO had extreme difficulty managing through a business downturn when the economy entered a steep recession.

While the CEO was able to manage a profitable business when the business was doing well, he was ill-equipped to manage through a downturn and make the necessary decisions to reduce costs and maintain some level of profitability.

In fact, the CEO became depressed and reacted by shutting themselves in their office and not coming out at all. The company at that point was rudderless and the next tier of management had to try to deal with their own issues without a plan.

The CEO’s spouse ultimately stepped in to try to manage things, however, had no business experience at all, so it was difficult for the spouse to make any significant decisions. The business encountered a decline in revenue as a result and their lender eventually terminated their line of credit.



The following are some key points that can be implemented proactively prior to encountering a business continuity crisis event.  Having a Plan B is extremely important to mitigate damage to a business when an unexpected event such as a loss of a key leader occurs:

Independent Board of Directors: An independent board of directors or advisors is extremely important, even for a very small business.

The independent group could include industry experts and/or an experienced current or retired CEO with industry experience. Most small family businesses don’t think they can afford this.

Our view is that they cannot afford not to have some outside people familiar with the business to turn to in a time of crisis. If funding is an issue, it may be beneficial to create an informal advisory board and compensate them with a token payment, goods or services of the company, or if possible, a small amount of ownership in the company.

Second in Command: Have a strong number two person in the company that is either an operating executive or a strong CEO or Controller: Make sure this individual is involved in every aspect of the business.

In our experience, a number of small family businesses do not have a strong financial manager. As a result, a family business owner does not have the support to manage the company’s finances proactively.

If the business cannot afford a strong CFO or controller there are a number of firms that provide fractional CFO services on a part-time basis.

This is critical in managing the financial side of the business and providing some understanding of the financial condition of the company in the event someone else steps in to replace a business leader.

Cross-Training Management: Many businesses have a leader that is used to making all of the business decisions or has most of the knowledge on how a business operates.

Subordinates typically do what they are told and don’t challenge the status quo. It’s extremely important to train key executives of a business so they understand how the entire business works and their role in managing the business.

The key executives should be challenged to work as a group to operate the business and work together to make decisions and overcome obstacles.

Take an Unexpected Vacation: A family business must learn to operate without the leader being involved. The leader should consider taking an unexpected vacation for at least a couple of weeks, to see how the business operates without them.

Key Man Insurance: Most small businesses depend on the leader to provide funding for the business.

Businesses should consider purchasing Key Man insurance that would provide funding for the business in the event of the untimely passing of a leader.


Loan Agreement:

If the business has an outside lender providing a credit line or other funding for the business, management should review the loan agreement to make sure the passing of a family leader is not an event of default.

If the loan agreement does have this type of clause, the lender could declare an event of default to gain some type of leverage over the business, particularly if the business is in financial distress.

Furthermore, management should approach the lender to discuss ways to mitigate this type of clause before such an event occurs.



While having a Plan B in the event of a business continuity crisis will not always solve all of the related problems, however, it will go a long way in mitigating the downside risk related to the business decline.

Having an outside advisor assist the company in preparing a Plan B can also ensure that all of the major business risk factors are covered in the plan. Not having a Plan B could result in the untimely failure of a business!


Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, a State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.