Home » Companies in Receivership

A company is in receivership when a receiver is appointed by a creditor because the company has defaulted on repayments A secured creditor is someone to whom the company has given a "charge", such as a mortgage, over all or part of its assets in return for value, usually loan funds.

The court does not need to approve of the appointment of a receiver, the appointment is usually done quickly. Receivers can carry on the business, or close it down, or sell it off. Their principal task is to realise sufficient funds to repay the creditors nd they are not there to deal with claims from creditors.

Companies can be both in receivership and either administration or liquidation at the same time. If that occurs receivers generally run the company because they have control over the secured assets, which are usually all the assets of the company.

Where receivers alone are involved they have power over the assets in respect of which they have been appointed. The directors remain liable to perform their statutory liabilities.

Voluntary administrations are often used by banks today rather than appointing a receiver because they provide an opportunity to enter into a Deed of Company Arrangement, they freeze creditor action and they avoid the negative perceptions associated with the somewhat private appointment of a receiver.