Pub 1 2021 Issue 4

8 | The Show-Me Banker Magazine LEGAL EAGLE SPOTLIGHT Andrea Chase Spencer Fane LLP EFFECTIVELY USING A RECEIVER Eric C. Peterson Spencer Fane LLP In recent years, secured creditors have become more familiar with using receivers as one method of protecting and liquidating collateral. In 2016, Missouri enacted the Missouri Commercial Receivership Act (MCRA), which provided a comprehensive statutory framework for receiverships. MCRA has increased creditors’ comfort with receivership. This article will provide some helpful background information and tips for effectively utilizing a receiver. I. Overview Receivership can be a beneficial tool. A receiver provides a level of control over the debtor’s assets and oversight over the debtor’s business. Rather than simply foreclosing on collateral, a receiver can continue to operate a business under court supervision. A receiver may also sell a business as a going concern. In Missouri, the appointment of a general receiver 1 stays non-receivership litigation and the exercise of creditor remedies for a limited period. MCRA also provides a process for claims administration if there are funds to be distributed after secured creditors are paid. There are drawbacks. Among them are the costs of paying for the receiver and its professionals. Generally, receivership expenses are paid from the assets of the receivership estate. Additionally, while the secured creditor may be the one proposing the appointment of a specific receiver, the receiver is an arm of the court, not the secured creditor. There is, therefore, a potential for some reduction of influence over the secured creditor’s collateral. II. Selecting a Receiver The receiver can be an attorney or an accountant, but it does not have to be. Under MCRA, almost any qualified non- insider who meets the “disinterestedness” test can serve as a receiver. Who a creditor selects as its proposed receiver will depend on the circumstances of the case. The secured creditor will consider the individual’s previous experience in serving as a fiduciary or operating a