What is a Receivership?
A Receivership is a form of external administration where a secured creditor appoints a ‘receiver’ to a company. This Receiver will collect and sell the company’s assets in order to recoup the debt for the creditors, with priority being given to secured creditors, followed by unsecured. The Court may appoint a Receiver following an application made by a creditor, or one will be appointed privately by the secured creditor/s.
Difference between Receivership and Administration/Liquidation
Unlike an Administrator or Liquidator, a Receiver’s primary obligation is to secured creditors, and to affect the payment of debt owed. In some cases, an Administrator or Liquidator may even be appointed alongside a Receiver.
Notably, the appointment of a Receiver does not always indicate that a company will be wound up, and it could be the case that only the secured creditor who sought appointment will be paid, followed by return to normal affairs for the business.
Summary of Receivership
There has been some parliamentary debate regarding the effectiveness of Receiverships, possible conflicting of priorities and the compounding of costs while appointed alongside Administrators/Liquidators.
If you are considering appointing a Receiver or would like to discuss your position in regard to Receivership, please do not hesitate to contact Roser Lawyers for a confidential discussion