What is receiver/receivership?

A Receiver is a person who receives or controls property on behalf of others and will normally have the power to sell assets and distribute the proceeds. There is a common misconception that receivership is synonymous with liquidation; this is not the case.

Before the Enterprise Act 2002, the appointment of a Receiver was the favored option of a secured creditor of a company where the company was in breach of a loan agreement, usually known as a debenture. The lender will usually be a bank or other financial institution. After the Act came into force on the 15th September 2003, the lender will usually have to now appoint an Administrator. It should also be noted that there are various categories of Receiver including an Administrative Receiver; a LPA (Law of Property Act) Receiver; a Court appointed Receiver.

When a company is in trouble, it generally has four options:

a) Immediate winding up;
b) Return to profit;
c) Invitation to the debenture holder to appoint an administrative Receiver;
d) Bring in an Administrator to try and rescue the Company.

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