A Receiver is usually appointed by a secured creditor under a Debenture containing a fixed and/or floating charge over all or most of the company’s assets. An asset Receiver can be appointed over specific assets where appropriate security exists. The appointment of a Receiver does not require engagement with the Courts, the appointment is by way of Deed of Appointment under the specific terms of the Debenture.
Why is a Receiver appointed and not a Liquidator?
A Receiver is usually appointed because the principal under a debenture is in arrears, the interest under a debenture is in arrears, or some other event has happened by which under the terms of the debenture the security has become enforceable. There is no time delay waiting for a Court date or the expiry of notice for a Creditors Meeting which are required for either a Court Liquidation or a Creditors Voluntary Liquidation
What are the powers of a Receiver?
The powers of a Receiver are essentially to manage the business of the company, carry it on and realise assets so as to repay the debenture holder.
The Receiver’s powers and duties depend largely on the terms of the debenture under which he/she has been appointed. In many cases the powers can be restrictive.
Do you as a Director have Obligations once the Receiver is appointed?
Yes the directors do have continuing obligations in respect of the Company, in particular once the Receivership ends the skeleton is legally passed back to the directors. It is the directors responsibility to arrange for the company to re commence filing accounts and annual returns. In practical terms having an orderly strike off or liquidation the appropriate course of action. There are times when an agreement with the secure charge holder for the appointment of a Liquidator at the outset can save substantial time and money for the directors and achieve the same outcome for the charge holder
How can O’Neill Foley help?
If you wish to discuss Insolvency or corporate restructuring generally, please contact David Walsh.