Corporate Business Receivership Help Advice and Support Service

Written by Keith Tully

Has your company been placed in receivership? Real Business Rescue can help you sort it out and there may be a solution to satisfy your creditors. Believe it or not, there are usually options, even in worst case scenarios!

Receivership can be intimidating for a business owner/director, especially if you’re not prepared for the process. Likewise, the procedure can be confusing for a novice creditor or an appointed receiver who is not sure of his or her rights and duties. The following information should help you gain a better fundamental understanding of receivership: 

What is Corporate Business Receivership?

When a debtor violates the terms of a mortgage or debenture agreement that contains a fixed or floating charge it becomes possible for their company or property to be placed under receivership. During this procedure the creditor can appoint a receiver to assume control of the insolvent company’s assets or property in order to recoup owed debts.

Typically, fixed legal charges are added to loans in order to secure a specific property against the debt, and provide the authority to exercise Law of Property Act (LPA) receivership. In this type of receivership the appointed receiver assesses the situation and determines whether it would be more suitable to sell the property or collect rent in order to recover debts.

Floating charges are used to secure a company’s assets, or a class of their assets, and usually provide the authority to exercise administrative receivership, in which the receiver assumes full control over the insolvent company’s operations. In administrative receivership, the receiver has the right to sell company assets or continue operations as usual.

Creditors, Do You Have a Case for Receivership?

A mortgage lender can only initiate LPA receivership if they’re able to exercise power of sale.  Under the LPA there are several circumstances that allow a lender to exercise power of sale:

1. If the mortgagor has been served a formal request to pay the mortgage money due, and has failed to do so within three months.
2. If some of the mortgage interest has been in arrears and goes unpaid for a period of two months after the due date.
3. If the mortgagor breaches a provision contained within the LPA or mortgage deed, other than the commitment to make repayments.
4. If the mortgage deed contains an express power (usually in the form of a fixed or floating charge) to appoint a receiver and the security contained therein has become enforceable, or if the deed excludes the operation of section 103 of the LPA and extends the power of sale. 

If any of the above circumstances apply to your situation, you may have the right to initiate the process of receivership as a creditor. If a debtor has defaulted on a mortgage or loan and the debt is not secured by a legal charge, it is important to serve a formal payment request notice as soon as possible to begin the preliminary process required for receivership. As a creditor, you do have a legal right to demand payment and it may take receivership to get the ball rolling.

Debtors, Are You in Danger of Receivership?

As a debtor you could be facing the legitimate possibility of receivership if any of the following is true:

1. You’ve been issued a formal notice requesting payment and have failed to make repayments within three months of receiving the notice.
2. Some of the loan interest is in arrears and has gone unpaid for a period of two months.
3. You’ve breached a provision in the loan deed that gives the lender the express power to appoint a receiver under a fixed or floating charge.

It should be noted that each mortgage deed or loan can contain its own unique provisions that allow for the initiation of receivership. For this reason it is best to review the loan terms with a qualified professional to determine whether you are genuinely at risk of facing receivership. 

What Real Business Rescue Can Do For You?

Our corporate business receivership help, advice, and support service is designed to provide assistance to lenders who are acting as independent receivers, business owners who are in danger of losing a property or company to receivership, and anyone who has any questions about LPA or administrative receivership.

We offer free initial consultancy in which we strive to attentively assess your situation and recommend the most suitable course of action to facilitate recovery or loss mitigation. Contact us today to find out how we can help you simplify the process of receivership and alleviate some of the stress associated with the procedure. If there is a solution, Real Business Rescue will find it for you! 

Author: Keith Tully

Linked In Google+ Twitter

Click here to join us on LinkedIn, Google+ and Twitter