Following the introduction of the Enterprise Act 2002, which promotes a more rescue-oriented insolvency regime, receiverships are becoming less commonplace. Holders of a floating charge created before 15 September 2003 are still able to appoint an administrative receiver.
When a company borrows money, such as from a bank, it can give the creditor a document known as a debenture, which gives the creditor charges over all of the assets and undertaking of the company.
Administrative receivership occurs when the holder of a floating charge appoints an insolvency professional – the administrative receiver – to recover money owed to it by a company which is experiencing financial difficulties.
A company in administrative receivership is often also referred to as being ‘in receivership’
There are numerous advantages and disadvantages to your company going into receivership – the bank or other creditor can step in to take control and save your business quickly, but it can rarely be saved in its existing form. However, this process often mitigates the risk of wrongful trading for directors and enables them to move forward. If necessary, we are able to negotiate with the secured creditor on your behalf.
If you are unsure of the most viable approach for your business, contact a member of the friendly team at Streets SPW today – we will listen to your concerns and help find the best solution for you and your creditors.
What Is Fixed Charge Receivership ?
This procedure is used where a secured creditor with a fixed charge over specific assets appoints a receiver over those assets. The most usual appointments are over property such as land and buildings and the receiver is appointed under the Law of Property Act 1925, where a default under the terms of the charge occurs.
Fixed charge receivers may also be appointed over specific plant and machinery or book debts.
Fixed charge receivership is a relatively cost-effective way of securing a recovery in particular distressed situations.