Receivership

Different appointments have different effects

A fixed-charge or property receiver may be appointed to collect income or realise particular charged assets. An administrative receiver is appointed over all or substantially all of the relevant company property under a qualifying security. A court-appointed receiver has powers defined by the appointment and applicable law.

A receiver is not automatically an administrator or liquidator. An asset receivership need not place the whole company into a collective insolvency procedure, and the statutory objectives and creditor protections of administration should not be assumed to apply.

Security and the right to appoint

The appointing lender’s rights depend on valid security, a triggering event and compliance with contractual and statutory requirements. The appointment document should identify the receiver, charged property, date and capacity.

Administrative receivership is restricted for many modern security arrangements, with statutory exceptions. The date and type of security matter. Property receivership is a distinct question; referring to every appointment as administrative receivership obscures important limits.

What a receiver can do

Powers may include collecting rent, managing or selling charged assets and applying proceeds towards the secured debt and authorised costs. Their scope depends on the legal basis of the appointment. A receiver can owe duties beyond the appointing lender, but does not generally act as a collective liquidator for all unsecured creditors.

Directors may retain functions outside the receiver’s control. A company may also enter another insolvency procedure, creating questions about who controls particular property and how proceeds and expenses are allocated.

What to check in the records

Start with the registered charge, appointment notice and the receiver’s stated capacity. Check title, the extent of the security and whether a sale concerns the business or only an asset. Do not infer a distribution to unsecured creditors from a gross sale price.

The receiver’s reporting and filing obligations depend on the appointment type and local law. A surplus after payment of the secured debt and proper costs may return to the company or another entitled party. A shortfall can remain a claim under the relevant agreements.

The Scottish framework

Scotland has its own property and security law. Floating-charge receivership and the Insolvency (Scotland) (Receivership and Winding up) Rules 2018 are relevant, with notices and information also provided to Accountant in Bankruptcy where required.

An English Law of Property Act receiver is not the default legal model for Scottish property. Establish the location of assets, type of security and appointment powers before comparing the position.

The process, at a glance

1. Identify the security and appointment right. The security holder assesses the trigger, power, restrictions and property involved.Process stage — practical timing varies
2. Appoint and give required notices. The document and applicable law define the receiver’s capacity and authority.Statutory milestone — check its trigger and exceptions
3. Manage or realise charged property. The receiver acts within the available powers, including relevant duties in relation to realisation.Process stage — practical timing varies
4. Account for proceeds and end the appointment. Proper costs, secured claims and any surplus are dealt with, with required accounts and cessation notices.Statutory milestone — check its trigger and exceptions