Receivership

Securing the assets

Receivership is the act of securing the assets of a company when it is done by an external professional manager. The receiver is appointed by the courts of law after the creditors petition the court for receivership. The general process of receivership is started by the banks or creditors if they feel the company no longer has the ability to repay their debts. These are the debts that are registered at the house of the company in receivership in the form of a 'charge loan'. The receiver is appointed with a view to selling the company’s assets, so in the long run the creditors can claim back the money they are owed.

Types of receiver

There are two main types of  receiver, which are the administrative receiver and the receiver appointed by a secured creditor holding a fixed charge (fixed charged receiver). Administrative receivers have a wide range of statutory powers and also have control over the assets of the company in receivership, which means that they may be able to continue to trade the business and sell it on, maximising the return to the bank. A downside to this type of receiver is that they have to be licensed insolvency practitioners.

The fixed charged receiver has the power to take possession and sell the charged assets. These receivers can be appointed if there has been a default in the lending terms on a property which means that two months of interest have been unpaid, three months of the principle amount has been unpaid or if there has been a substantial breach of contract.