Receiver’s Powers
Receiver Powers and Duties
Receivers are guided primarily by the terms in their appointment documents, usually a debenture or mortgage, allowing them to act in the lender’s interest rather than prioritizing the company or other creditors. Although the receiver has broad powers, they must avoid unnecessary harm to third parties and carefully choose whether to trade or sell assets.
Statutory Powers
The Companies Act 2014 outlines comprehensive powers for receivers, such as borrowing, managing business operations, hiring employees, and defending legal claims. These statutory powers complement any specific powers outlined in their appointment documents. However, a court-appointed receiver may have limitations based on court appointment terms.
Asset Sales
When selling assets, a receiver must aim to achieve the best possible price, though there is no obligation to wait for market improvements. A 14-day notice to creditors is mandatory if selling significant non-cash assets to company insiders.
Agency Role
While acting as the company’s agent, a receiver can bind the company but is personally liable for new contracts unless otherwise specified. They can also disclaim pre-existing contracts. In certain cases, like environmental obligations, statutory responsibilities apply directly to the receiver.
Court Guidance
The 2014 Act allows receivers, creditors, and company members to seek court guidance on the receiver’s powers, especially if their interests may be affected.