Receiverships

Explainer 

A receiver can act like a caretaker/manager ensuring that one or more assets or a business are protected.  

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In some cases, the Receiver will also be appointed over assets in order to sell them and pay back the party by which they were appointed. 

Receivership is a legal process where a receiver is appointed to take control of one or more assets, either to manage them while a dispute is ongoing and/or to repay creditors.

What types of Receivership are there?

There are four main types of Receivership:

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Fixed Charge Receivership or Law of Property Act 1925 Receivership (LPA) - appointed by a lender with a charge on a specific asset like property or machinery.  The Receiver takes control of and manages the assets with a view to selling it and repay the lender.  

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Court-Appointed Receivership - usually upon a request from a creditor, shareholder, or other interested party, in cases where there’s a dispute or risk of asset loss.  The receiver is there to preserve or protect assets, often in cases involving fraud, mismanagement, or shareholder disputes

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Receiver and Manager - appointed by a creditor holding security with broader powers than a standard receiver and can not only collect and sell assets but also manage the business itself to try to improve its financial position.

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Administrative Receivership - appointment by a secured creditor (usually a bank) who holds a specific type of security, like a floating charge, over most of the company’s assets.  The receiver manages and sells the assets to repay the secured creditor (similar to Administration).  This type is less common today and it’s only available for certain types of charges created before 2003.

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