Receivership

Receivers are normally appointed by a bank or other lender who hold a debenture or charge on a loan or overdraft. If a company breaches the terms of its borrowing from this type of creditor then the terms of the debenture or charge can be enforced and a receiver appointed over some or all of the charge assets.

Administrative Receivership is the mostly widely recognised remedy available to a creditor holding security which includes a floating charge over all (or substantially all) the assets of a company. An administrative receiver will act as agent of the company over whose assets s/he is appointed and the principal function is to recover the monies owed to the creditor by whom he is appointed normally by continuing to operate the business, whilst trying to sell it as a going concern.

There are other forms of receivership that lenders can enforce over specific assets such book debts, property. The powers of these receivers are determined by the charge granted to the secured lender.

It will no longer be possible to appoint an administrative receiver under a security instrument created after 15 September 2003; this is part of the Government's drive to encourage the use of the administrations procedure instead of administrative receiverships.