Receiverships

A Receivership is an option offered to secured creditors to recuperate unresolved debts under a secured loan in the incident the business defaults on its loan payments.  

What is a Receivership?

A receivership can occur when:

  • A secured lender wishes to recover his/her loan
  • An interested party (such as a shareholder, director or investor) makes an application to the Court

After this occurrence, the receiver will realise the Company’s assets and disburse the funds according to law. This process can be used to safeguard assets in the interim whist other Court action proceeds.

Court Appointed Receivers can be used in dispute circumstances.

What causes a Receivership?

Receiverships are caused when a company is unable to pay its debts and are receiving pressure from secured and unsecured creditors.

A receivership may also be caused when management does not have the skill set to move the business forward – more often than not the business is already strained because of past activity. This often causes major failure in business control and management systems, leading to disputes between directors and shareholders and defaults on loan repayments to secured lenders.

In order to prevent on-going losses and the inability to improve trading, a Liquidator or Administrator should be appointed to the business.

Role & Power of a Receiver?

A receiver is an independent person who controls the assets of the business. They would manage those assets to recover all or part of the debt for a secured creditor.

Receivers will take control out of the hands of the director and have the potential to trade on the company and sell the business if there is a growing concern.

Receivers can conduct limited investigations of the company’s affairs.

What is the outcome of a Receivership?

A receivership usually ends when the receiver has collected and sold all of the assets or enough assets to repay the secured creditor, completed all their receivership duties and paid their receivership liabilities. Generally, the receiver resigns or is discharged by the secured creditor. Unless another external administrator has been appointed, full control of the company and any remaining assets goes back to the directors.


Contact us

If you would like more information about how SV Partners can assist your business through a receivership process, please contact one of our expert advisors.

 

Contact our Corporate Insolvency Experts

If you have any questions relating to our Corporate Insolvency services, please contact one of our expert advisors.

 

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