Receivership

A receiver is a person appointed to collect or protect property for the benefit either of the appointer or of the persons ultimately held to be entitled to that property.

A reciever is appointed by a debenture to take possession of the assets subject to the debunture holders charge, allowing the reciever to realise their assets and sell to pay off the debenture holder.

The reciever may decide that they wish to continue the business to maximise the value of the companies assets, or a view of selling the business as a going concern if it could mean that all employees, with their reducndancy entitlements, are transferred to a new purchaser.

A charge on a company’s assets may be categorised as fixed e.g. a mortgage on a freehold property or as a “floating” charge e.g. on stock.

A debenture holder waiting on a floating charge may only receive money after the receiver’s fees have been paid and preferential creditors have been discharged.

In many cases, a floating charge has little value to a debenture holder given the extent of preferential claims.