A Receivership is used for the purpose of enforcing security and it will usually be a bank or private equity fund who appoints a Receiver on foot of a debenture which incorporates a fixed and/or floating charge over the assets of a company.
When is a Receivership suitable?
A Receivership is suitable in a variety of cases but arises primarily when the faculty under which funding has been provided is in default or where a company is being placed in or is under threat of Liquidation.
What determines the powers of a Receiver?
The powers and duties of the Receiver will be dependent on the terms of the debenture under which he is appointed. The debenture will include conditions for the appointment of the Receiver which may include a loan being in arrears, or the terms of the facility being in default.
What are the duties of a Receiver?
The main duty of the Receiver is to realise the assets included in the debenture and to discharge the amount owing to the debenture holder. In the case of a debenture which incorporates a floating charge the Receiver must first discharge the preferential creditors in advance of making any payment to the debenture holder on foot of the Floating charge.
In certain circumstances, the floating charge may be crystallised into a fixed charge prior to the appointment of the receiver, thereby giving the debenture holder priority over the preferential creditors.
How can Baker Tilly Kirk assist?
Baker Tilly Kirk has years of experience in dealing with receiverships. We can assist your company receivership by:
- Acting as Receiver
- Advising a company where a Receiver has been appointed