Exploring the Increased Role of Receiverships in the Sale and Liquidation of Distressed Companies: A Conversation With Harney Partners

In the May episode of the TMA Chicago Midwest Podcast, I sat down with Jim Keane and Greg Milligan from Harney Partners to talk about the increased importance of receiverships as a way of selling or liquidating distressed companies. 

Jim Keane, the Chief Operating Officer at Harney Partners, has over 30 years of experience in turnaround bankruptcy, advisory transactions, and fiduciary engagements. Greg Milligan, an Executive Vice President at the firm, leads their fiduciary services practice and spends most of his time serving in some form of fiduciary capacity.

We started the podcast by discussing why restructuring is a compelling field for them. Both Jim and Greg agreed that the challenge and variety of the work, as well as the impact they can have on companies and stakeholders, make it rewarding. 

Next, we focused on receiverships. Both Jim and Greg are often court appointed receivers in cases throughout the country in both state and federal court. After providing an overview of the types of receiverships and the differences between them, Greg noted that both lenders and distressed companies should consider receiverships in distressed situations, explaining that it allows for professional management to step in and take control, which can be beneficial for both parties from a liability management perspective.

Jim added that receiverships can be applied to almost any industry and have the flexibility to be adapted to each situation. He often sees them in real estate, senior living and cannabis, the latter of these being the result of the current prohibition on cannabis companies filing for bankruptcy. In addition to being an effective tool for handling distressed companies, receiverships are also generally less expensive than bankruptcy proceedings with fewer stakeholders, making them particularly attractive to lenders looking to maximize their recovery.

We also discussed the importance of the receivership order, which serves as the "rules of the road" for the case, and some fundamental provisions that receivers should make sure are included in the order. As some typical first steps after entry of the order, Greg emphasized the need for receivers to understand what is permissible under the order and applicable law, secure the company’s assets, ensure proper insurance is in place, and build trust and relationships with key internal leaders. We wrapped up our conversation on receiverships with Jim and Greg, discussing the potential challenges in sale-oriented receiverships and the importance of understanding the Federal Priority Statute. 

Finally, we closed the podcast by talking about business development with Jim and Greg sharing some tips based on the current economic environment and the potential for increased liquidations due to the current interest rate environment.

Listen to the episode.