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Insolvency – Receivership

Administrative Receivership

Prior to 2002, creditors holding a charge over a company’s assets (usually a bank), had the right in certain circumstances to appoint a receiver. A receiver was an Insolvency Practitioner who acted on behalf of the creditor. Its duty was to take custody of the company’s assets and exercise powers with a view to satisfying the debt owed to the creditor.

In 2002 the law changed and restricted the use of this procedure to certain types of companies or floating charges created prior to September 2003. For this reason, administrative receiverships are rare (in 2018 there were only a handful in the UK).

LPA Receivership and Fixed Charge Receivership

LPA receiverships and fixed charge receiverships are different to administrative receivership.

Under the Law of Property Act 1925 (LPA), creditors (usually banks/lenders) that hold a fixed charge over property have a statutory right to appoint an LPA receiver.

A fixed charged receivership is when a creditor who has a fixed charge over a company’s assets, has the power under the terms of the security documentation to appoint a receiver.

In both situations the receiver will have powers to help realise the debt owed to the creditor by taking charge of the assets/property. This could mean selling the assets that are the subject of the charge.

What can you do if a receiver is appointed in respect of your company’s assets?

We are experienced in advising both lenders in respect of the appointment of receivers and companies facing receivership which enables us to have valuable expertise in advising on this specialist area.

If you receive a formal demand from a lender indicating their intention to appoint a receiver, or a receiver has been appointed in respect if your company, it is critical that you seek urgent advice.

We regularly advise companies on the validity of the appointment of a receiver, their rights and the best course of action. We offer practical, commercial advice rather than just restating the law.

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