The processes and intricacies involved in Administrative Receivership and LPA oversight can be difficult for company directors to fully understand and get to grips with. Click the video below for a detailed overview.
Administrative receivership is a process initiated by a secured creditor who has lost faith in a company's ability to repay the sums owed. Administrative receivers are appointed with a view to selling assets of the company in order to repay the sums owed to the secured creditor.
There are some similarities between administrative receivership and administration –however, administrations are more common now as a secured creditor is generally only able to appoint an administrative receiver in circumstances where they are holding security – most commonly a debenture – that was granted before the 15th September 2003.
Whether or not you'll be able to keep avoid company from entering administrative receivership will depend on how far along in the process you are, and how soon you take action after becoming aware that the secured creditor is contemplating making such an appointment. If the company has already breached the terms of its banking or loan facilities, it is highly advised to contact us as soon as possible to discuss the options which may be available.
A receiver appointed specifically under a fixed charge generally has more limited powers as they can only deal with the fixed charge property and not the business generally. A fixed charge receiver may also be referred to as an LPA receiver where a receiver is appointed under the Law of Property Act 1925 to take back control of the property where the borrower has defaulted on the terms of its loan.
LPA receivership is not a formal insolvency procedure and so should not be confused with administrative receivership. While LPA receivers are commonly appointed where the borrower has failed to repay a loan, it can also occur where there have been other breaches of the loan, for example, a breach of the loan-to-value covenant. The fixed charge receiver is usually given extensive powers to run the business at the property and to divert the business income to the lender.
For more information on administrative receivership and LPA receivership and the options that are available to you and your company, you can arrange a free consultation at one of our regional offices and seek confidential advice from an insolvency practitioner.
14th February 2019
The bakery chain business Patisserie Valerie has been acquired out of administration by an Irish private equity firm called Causeway Capital Partners.Read More
13th February 2019
The department store operator Debenhams has secured access to a £40 million credit facility that should help it cope with the pressures of its ongoing funding crisis.Read More