As part of the complete business service offered by the Morgan Cole Business Support and Insolvency team, Receivership forms one of our areas of expertise. The team led by Paul Caldicott (Partner and Licensed Insolvency Practitioner) are on hand to provide tailored solutions to financial difficulties.

We act for clients advising on all aspects of Receivership; quick and prompt delivery of a security and title review, through the appointment process and regulatory advice to the eventual sale of the charged asset.

We are able to provide specialist advice in this niche area of law which can be a low cost and efficient means for a lender to enforce their security against a defaulting creditor. The most common forms of enforcing security under the modern insolvency regime are either to place a company into administration or to petition for the company to be wound up. Receivership can offer an alternative method of enforcing security without recourse to the Courts, therefore keeping associated professional costs to a minimum.

Benefits on appointing a Receiver

The power to appoint a Receiver is found either in statute or a mortgage deed or charge. All Receivers will normally have the power to derive income from the property over which they are appointed, such as to recover any rents due, and to distribute the income in accordance with their appointment powers, which will more often than not be to the appointing mortgagee, unless there are any prior ranking charge holders.  The Receiver may also distrain for any rents which remain unpaid, and usually includes the power to sell the property if this will discharge their duty to recover the debts owed to the charge holder. These core powers are normally expanded upon within the charge or mortgage document, the additional powers available are only limited by what the parties have agreed upon.

The main benefit of appointing a Receiver is that the duty of the Receiver is to recover monies on behalf of the appointing party, subject only to the rights of any prior charge holders.  Therefore, unlike Administration or even Liquidation, where the actions of the office holder are for the collective benefit of all creditors, a Receiver’s duties are to maximise realisations for the lender who made the appointment.  This ensures that costs can be kept to a minimum and recoveries can be rapid, as there are no wider implications that the Receiver will need to consider and no statutory duties to administer the whole estate of the company with which the Receiver will have to comply.

Administrative Receivership

Administrative Receivership may be available in limited cases where the charge being enforced was entered into prior to 15 September 2003 and in very limited circumstances after that date. Administrative Receivers must be licensed Insolvency Practitioners, and once appointed will have powers in excess of an LPA or Fixed Charge Receiver. Administrative Receivers will in general have the power to deal with all assets of a company, and can if required, sell the business as a going concern, furthermore, the duties of the Administrative Receiver are to act for their appointing lenders and not for the interests of company creditors as a whole.

Conclusion

Where available, appointment of a Receiver can provide a cost effective and swift solution to the recovery of monies under a security. 

The Morgan Cole Business Support and Insolvency team are regularly called upon to advise a client about their options. In the current climate of part-built developments and construction insolvencies the appointment of a Receiver can be a cost effective means of taking control of the development to achieve completion or an early sale.