Receivership
& Administration |
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Business heading up the creek?
Use our paddle...
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What Is Administration?
An administration order is usually sought through a petition by a company that is insolvent, or is likely to become so. This procedure places the company under the control of a licensed insolvency practitioner and the protection of the court to achieve one (or more) specified statutory purposes. The aim is to save the business or achieve a better result for creditors than in liquidation. Any creditor with a floating charge must also be given the opportunity to decide whether to appoint an administrative receiver or their own administrator before the order is made. If the petition is successful, the company will be placed under the day-to-day control and management of an administrator. The administrator proposes ways to fulfill the order and presents these suggestions at a creditors’ meeting. Once under an order, the company is protected from creditors.
Administrative Receiver
A licensed insolvency practitioner appointed by the holder of a floating charge, created before 15th September 2003, covering the whole, or substantially the whole, of a company’s property. An administrative receiver can carry on the company’s business and sell the business and other assets subject to the floating charge to repay the secured creditors and preferential creditors.
Administrative Receivership
An administrative receiver is appointed by a bank or other lending institution, which holds the majority of a company’s assets as security against lending under a floating charge debenture.
The administrative receiver can continue to operate the business, and often does, whilst trying to sell it as a going concern. A higher price is usually gained than if the company’s assets were disposed of piecemeal. The purchaser acquires the business free of debt and the money received is distributed to creditors in the order of their security and statutory order of priority.
An administrative receiver has no authority to deal with the claims of unsecured creditors. If sufficient funds become available for distribution to the general body of creditors they are dealt with by a liquidator appointed separately. Under the recent reform of insolvency law, administrative receiverships are not possible in respect of debentures dated on or after 15th September 2003. Administrative Receivers can still be appointed in respect of loan documentation dated before 15th September 2003, where the loan documentation enables such an appointment in the event of a default.
What Is A Administrator?
An administrator is a licensed insolvency practitioner appointed in respect of an administration to achieve the statutory purpose. The administrator will need to produce a plan for approval by the creditors to achieve this.
What Is A Receiver?
An individual appointed by a secured creditor under the terms of a mortgage or debenture in respect of specific assets of a company or individual. A receiver need not be a licensed insolvency practitioner.
What Is A LPA Receiver?
Law of Property Act Receiver. Appointed by a mortgagee or charge holder over a specific asset - usually a property. |
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