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‘Receivership’ is a term used in respect of many types of insolvency, but can be summarised specifically as follows:
Administrative Receivership
With the introduction of The Enterprise Act 2002 it is only possible for an Administrative Receiver to be appointed under the terms of a debenture created prior to 15th September 2003.
A debenture holder, usually a bank under a charge (fixed and/or floating) will appoint a receiver to the company. The task of the Receiver is to realise the assets available, and to make payments to the debenture holder. Any surplus remaining is passed to a Liquidator for distribution to the company’s creditors. Receivership offers a far better opportunity for a company to continue trading in the hope of attracting offers to purchase all or parts of the business as a going concern while preserving the employment of many of the company’s personnel.
LPA Receivership
In this instance a Receiver is appointed by a mortgagee to a property under the provisions of The Law and Property Act. In general, the Receiver is appointed to the property and receives the income, usually rents, until such time as the property is sold. The Receiver does not deal with the other general assets of the company whose affairs remain the responsibilities of its Directors.
Fixed Charge Receivership
Appointment is usually made by a Bank, which holds a fixed charge over the assets of a company. In most cases the charge will be over the outstanding book debts. The Receiver collects and distributes the funds to the debenture holder. All other aspects of the company’s affairs remain with the Directors.
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