Administrative Receivership, or “Receivership” as commonly referred to, is a process that is, ordinarily, used by a secured creditor, such as a bank, to appoint Administrative Receivers to take control of the Company’s financial affairs with a view to realising the Company’s assets that are subject to its security.
Although Administrative Receivership is still a process by which a secured creditor can appoint Receivers to realise assets on their behalf, it is a process which is now used less and less. More often than not, Administration is now probably the process of choice used by secured creditors to realise assets that are subject to their security as long as the criteria for appointing an Administrator are met.
However, it is still possible for a secured lender to appoint an Administrative Receiver as long as their security documentation provides them with the necessary powers to do so. It would be normal practice, in appointing Receivers and placing the Company into Administrative Receivership for the Bank to engage Insolvency Practitioners of their choice to undertake the Receivership process. Ordinarily the Bank, and the nominated Receivers, would work with the current board of directors to ensure that all parties are working together to ensure the best possible outcome is achieved. However, it should be noted that the Administrative Receivers prime duty and objective is to realise the Company’s assets for the secured creditor.
If you want to talk to an independent Insolvency Practitioner if you believe that receivers are being in the process of being appointed, or you simply want a second opinion, then contact Corporate Financial Solutions and we will provide you with appropriate advice and guidance.