Griswold Receivers was appointed to protect a multimillion dollar property used as collateral for an Arizona-chartered bank loan, using California receivership laws.
In a recent case, an Arizona-chartered bank successfully used California’s receivership laws to protect and preserve a multimillion-dollar property after borrowers defaulted on over $5.2 million in loans. The loans, which were personally guaranteed, were secured by a luxury home in Newport Coast, California.
Instead of using the loan funds for business purposes, the borrowers allegedly funneled the money into high-interest merchant cash advance (MCA) contracts, some carrying rates up to 200%, to fund an extravagant personal lifestyle. Court documents and bankruptcy filings revealed further misconduct, including perjury, the diversion of corporate assets, and the abandonment of a major property renovation.
By the time the Arizona bank petitioned the court, the property was vacant, incomplete, and at risk of deterioration. The borrowers had moved to Arizona, raising concern that they might attempt to sell, damage, or further encumber the asset.
Griswold Receivers was appointed under California Code of Civil Procedure § 564(b)(2) and (b)(9). In accordance with the Deed of Trust, which allowed for the appointment of a receiver upon default, the court granted the Arizona bank’s ex parte application. The property was found to be insufficient to satisfy the outstanding debt, and the defendants had contractually consented to receivership as a condition of the loan.
Following our appointment as receiver, we conducted a full property inspection, verified the state of disrepair and halted construction, and solicited multiple listing proposals ranging from $7.3M to $8.995M.
This case is a clear example of how Arizona lenders can leverage receivership remedies to recover value on distressed collateral, even when properties are located out of state and borrower misconduct is involved. The swift appointment of a receiver provided immediate asset control, mitigated further risk, and created a safe path to maximize recovery.
Griswold Receivers provides expert receivership services in Arizona, California, Nevada, and elsewhere. Contact us today to discuss how we can help restore, preserve, or protect assets in your region.
Recommended Resources:
- Download: Mitigating Fire Risk in Vacant and Abandoned Properties
- Download: Gaining Control and Securing Vacant Commercial Properties
- Download: Fires, Floods and Foreclosures: How Receiverships Intervene Before a Public Disaster
