Pictures of packed hospitals and the makeshift treatment center being set up at the Wisconsin State Fair Park in West Allis have many people under the assumption that healthcare providers are doing gangbusters during the pandemic. However, many healthcare providers are actually struggling to make ends meet as the public delays routine care and cancels elective treatments. Advance Pain Management, which operates ambulatory surgical centers across the state, is one of the latest providers to announce it is closing its doors in response.
The company plans to wind down operations and sell off its assets under the supervision of a court-appointed receiver. The company is taking advantage of Wisconsin’s unique alternative to bankruptcy, Chapter 128 receivership, as it works toward a closing.
What is receivership?
A receivership is an alternative to bankruptcy that Wisconsin lawmakers crafted in order to assist with the quick closing, sale, or restructuring of a company. While bankruptcy is federal law and is handled in the federal courts, a Chapter 128 receivership is Wisconsin law, and the cases are handled in our state courts.
A receivership is so named because the court appoints a receiver to take over the business and run it with the interest of the company’s creditors in mind.
When a business is closing down, like Advance Pain Management is, the receiver will be in charge of managing the sale of company assets. Oftentimes the assets are heavily discounted in order to get the money needed to pay off financial obligations and wind down operations as quickly as possible.
When the business is not closing, it is the receiver’s job to dig into the company’s financial records and take a look at its operations in order to determine if the business can be effectively restructured and turned back over to the current owners, or if it is better to sell the whole thing to new owners.
If the receiver can find a way to dig the business out of debt and restructure it so that it can become profitable once again, he or she may do so. In order to make the process more efficient than bankruptcy, the receiver has much more flexibility than a bankruptcy trustee has when it comes to determining which assets can be sold off, what debts should be renegotiated, and how to move forward.
A receiver may also be charged with the continued operation of the business while a new owner is sought. If the business is being sold as a going concern, the receiver may choose to appoint an operating agent who will be tasked with managing the day-to-day dealings of the business.
Receiverships Are a Good Option When Speed Is Key
Compared to Chapter 7 or Chapter 11 bankruptcy, a Chapter 128 receivership may be a faster and cheaper way to resolve a business’s financial woes. They are definitely an option business owners in the Milwaukee area should consider if they are in financial distress.
The Hanson & Payne team can advise any business owner of the pros and cons of receivership, and outline what choosing to go into receivership or file for bankruptcy would mean going forward. Please contact us today if you would like to schedule a meeting with one of our experienced attorneys.