State Receiverships: A Banker’s Tool for Faster, Cost-Efficient Recovery on Troubled Loans

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Receiverships have become increasingly popular tools for developing and implementing cost-effective and expeditious workout strategies for troubled loans. Washington’s Receivership Act, one of the best in the country, can be an effective tool for lenders.

A state court receiver is an independent officer appointed by the court to manage or liquidate the assets of a borrower for the benefit of its creditors. In most cases, a secured lender selects the receiver before the appointment. Banks frequently decide to use a receiver to take over the borrower’s assets if workout negotiations are unsuccessful or if the property might be subject to neglect, ineffective management, vandalism or unusual liability concerns. Washington has one of the most advanced receivership statutes in the U.S. and lenders can benefit from knowing how to use it effectively.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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