As a restructuring professional, I often act as a fiduciary to resolve questions over a troubled business’ assets. Depending on whether or not the company is in bankruptcy or other litigation, a number of fiduciaries can be involved in these court and out-of-court proceedings, including bankruptcy trustees, court-appointed receivers and assignees for the benefit of creditors. These three roles have several powers and duties in common; in general, their administrative claims for fees and costs involved in managing or liquidating the troubled company take priority over those of other general creditors. According to the terms of their appointment, they can sell the business to the highest bidder, distribute the sales proceeds to creditors, and allow or reject creditor and shareholder claims. Generally, they’re required to follow liquidation priorities under state and federal law regarding taxes, secured claims, general unsecured claims, equity claims and other matters. The laws and rules that govern priority can change depending on the type of fiduciary involved and the nature of the proceeding, however, as a current U.S. Securities and Exchange Commission (SEC) case I am involved in shows. This Chicago federal court case, United States Securities and Exchange Commission v. Jason R. Hyatt et al, Case No. 08-2224, involves approximately $22 million that was solicited from individuals for investment in a series of commercial jet aircraft transactions. After the SEC determined the investors’ funds had been misused, the commission asked me to act as the court-appointed receiver and manage the investors’ interests in six commercial jet aircraft leased to Alitalia, British Airways and US Airways. I successfully sold one of the planes, a Boeing 737 leased to British Airways, and am continuing to manage the remaining aircraft. Under most priority rules, investors or shareholders in any business are the last to be repaid (if at all) once the business is in liquidation or receivership. Nevertheless, Commercial Recovery Associates developed and implemented a court-approved plan that used the aircraft sale and lease proceeds to repay the defrauded investors before the repaying the creditors. As I explained to the court, a securities receiver’s distribution plan may be authorized so long as it is reasonable and fair. In this case, the defrauded investors, unlike shareholders of most companies, were more like innocent crime victims than active participants who were managing the company. The court agreed with our plan, and allowed us to make the investor distributions over the objections of two creditors who were owed nearly $1 million. This case demonstrates that even widely accepted rules regarding restructuring and distribution of assets are not set in stone. My partner, Alan Friedman, and I have enough turnaround management expertise in a wide variety of industries to find a successful solution for our clients in almost any situation. During each of our receivership engagements, we assess the stakeholders’ distinctive priorities, take a proactive approach and develop a unique plan of action to ensure results.

When business partners are also partners in life, it can create serious trouble at work. Seeking the advice of objective observers can be an effective way to work through these types of business issues. “We have no “We have no axe to grind,” Commercial Recovery Associates Partner Alan Friedman says. “We’re the honest arbiters in the situation.” Commercial Recovery Associates helped one couple keep their marital problems from destroying their business by providing candid feedback and instituting good business procedures. The couple, who were divorcing, owned an entertainment venue in the Chicago area. During the divorce, the couple attempted to put a value on the business, and each side’s lawyer recommended appointing a receiver to help sort things out. Commercial Recovery Associates was chosen in court to act as the receiver, and the firm found that the couple’s inability to agree on basic business decisions was crippling the club’s potential for success. The husband and wife had overlapping authority on booking the premises, and would often double-book dates without consulting each other. Issues with the bar staff caused tension between the couple, and those tensions spilled over into their dealings with their employees. The club also did not keep accounting records, making it nearly impossible to assess its financial situation. “We could see there was a real business there, but it clearly would not have lasted that long without serious changes,” Commercial Recovery Associates Managing Partner Robert Handler says. Commercial Recovery Associates established cash reporting procedures immediately to account for the club’s income and expenses. Friedman and Handler replaced the bartending staff, alleviating much of the tension among employees. They introduced an Internet calendaring system to eliminate booking Commercial Recovery Associates helped one couple keep their marital problems from destroying their business by providing candid feedback and instituting good business procedures. The couple, who were divorcing, owned an entertainment venue in the Chicago area. During the divorce, the couple attempted to put a value on the business, and each side’s lawyer recommended appointing a receiver to help sort things out. Commercial Recovery Associates was chosen in court to act as the receiver, and the firm found that the couple’s inability to agree on basic business decisions was crippling the club’s potential for success. The husband and wife had overlapping authority on booking the premises, and would often double-book dates without consulting each other. Issues with the bar staff caused tension between the couple, and those tensions spilled over into their dealings with their employees. The club also did not keep accounting records, making it nearly impossible to assess its financial situation. “We could see there was a real business there, but it clearly would not have lasted that long without serious changes,” Commercial Recovery Associates Managing Partner Robert Handler says. Commercial Recovery Associates established cash reporting procedures immediately to account for the club’s income and expenses. Friedman and Handler replaced the bartending staff, alleviating much of the tension among employees. They introduced an Internet calendaring system to eliminate booking Commercial Recovery Associates was chosen in court to act as the receiver, and the firm found that the couple’s inability to agree on basic business decisions was crippling the club’s potential for success. The husband and wife had overlapping authority on booking the premises, and would often double-book dates without consulting each other. Issues with the bar staff caused tension between the couple, and those tensions spilled over into their dealings with their employees. The club also did not keep accounting records, making it nearly impossible to assess its financial situation. “We could see there was a real business there, but it clearly would not have lasted that long without serious changes,” Commercial Recovery Associates Managing Partner Robert Handler says. Commercial Recovery Associates established cash reporting procedures immediately to account for the club’s income and expenses. Friedman and Handler replaced the bartending staff, alleviating much of the tension among employees. They introduced an Internet calendaring system to eliminate booking “We could see there was a real business there, but it clearly would not have lasted that long without serious changes,” Commercial Recovery Associates Managing Partner Robert Handler says. Commercial Recovery Associates established cash reporting procedures immediately to account for the club’s income and expenses. Friedman and Handler replaced the bartending staff, alleviating much of the tension among employees. They introduced an Internet calendaring system to eliminate booking issues, and even assisted with other tasks like restocking the bar. As a result of the changes, the club began running more smoothly and continues to operate today. “We took on more than what was called for,” Handler says. “The idea was to preserve the business.” The successful turnaround is one of several that Commercial Recovery Associates has handled for businesses run by married couples or relatives. While it can be difficult for partners to see the toll their personal relationship is taking on their business, a turnaround management firm can improve the business’ performance by moderating sensitive issues and providing objective expertise on finances and operations. “Whether it’s between a husband and wife, siblings, or parents and children, we can help with any partnership dispute,” Friedman says.