Administrative Receivership
We’ll do all we can to help save your business, but if a formal insolvency process is the only solution we’ll guide you every step of the way.
What is it?
Unlike administration, receivership is initiated by a company’s creditors (often a bank) and not the company itself. When a business borrows money, the lender is usually given some security over its assets to guarantee payment. If you fail to keep the terms of the loan, the lender may be entitled to appoint an administrative receiver who will take control of the whole, or a substantial part, of your property and business.
What will happen?
Your bank may request receivership if you breach its terms of borrowing. At that point a receiver (a licensed insolvency practitioner) is appointed by the court and must look to recover as much money as possible in order to settle the claims made by creditors.
Under receivership the interests of the creditors take precedence. The survival of the company is largely irrelevant as the receiver looks to sell assets or even the whole company to pay off the debts and the court costs. The receiver may sell the assets piecemeal, or sell the whole business as a going concern to pay off the secured creditor, and cover the costs of the receivership.
Before 2003 receivership used to be a very common recovery tool for the banks. Now it is less commonly used and it is in fact disappearing gradually. Most banks use administration as a recovery tool now.
However, if your company has borrowed money from a bank before 15th September 2003 then it is still possible for the bank to appoint a receiver. If the borrowing was after that date they cannot appoint a receiver at all.
How White Maund can help
If your business is in trouble and the relationship with the bank is breaking down, taking expert advice will be the first step on the road to recovery. We can help you work out what to do for the best. Call for a free consultation.