Business Recovery and Insolvency Practitioners
Administrative Receiver - Appointment
When a company is in default or breaches the
terms of a security document, the lender may
demand payment. If repayment is not forthcoming
then an Administrative Receiver is
appointed by the lender.
An Administrative Receiver is usually
appointed by a lending institution, mainly banks
who have, as security for a loan, a debenture
which, in most instances, will incorporate a
fixed charge.
This does not have to be just one bank it
can be, and often is, a consortium of banks.
The Administrative Receiver can continue
to operate the business whilst trying to dispose
of it as a going concern. If he manages to do
this he will naturally achieve a higher price
than had the company been disposed of on a break
up basis.
A Receiver can be appointed relatively quickly
and with minimum formality.
The Receiver ceases to act when he has realised
those assets covered by the security document
or repaid the appointee in full.
Administrative Receiver’s Authority
An Administrative Receiver does not
have the authority to agree or to deal with
the claims of trade creditors and any funds
that become available above the requirement
of the debenture holder will be dealt with by
a Liquidator.
For details on terms used pleased
see our glossary.
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Appointment of an Administrative
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