If a company is financially distressed, a secured creditor or the Court may put it into receivership and appoint a Receiver. A Receiver’s role is to receive and realise the company’s assets and then distribute the proceeds to the secured creditors.
Receivers are generally appointed under the terms of a security document, such as a General Security Agreement.
A Receiver and Manager has additional powers – which is to manage the distressed business – and it is usual for them to be appointed to a company at the same time as a Voluntary Administrator.
A Receiver and Manager acts for a secured creditor, while a Voluntary Administrator looks after the interests of unsecured creditors.
The Court may appoint a Receiver or Receiver and Manager – usually when there is a partnership dispute and an independent party is needed to resolve it. This situation often requires a detailed examination of the financial records of the partnership and the disposal of the partnership’s assets.
The role of the Receiver, or Receiver and Manager, typically includes:
- undertaking an assessment of the assets available for realisation and settlement of the debt owed to the secured creditors;
- regularly reporting the results of investigations and details of current trading back to the secured creditors;
- realisation of the secured assets either individually or by sale of the business as a going concern; and
- payment of the secured debt and any other debts with preferential entitlement, such as employee entitlements.
WAIS has extensive experience acting as Receivers, and as Receivers and Managers, as well as with court appointments to resolve partnership disputes.
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