Receivership Appointment

The appointment of a receiver is a means for enforcing security over a company’s assets, typically under a debenture that may grant fixed or floating charges. Appointed by the lender (chargee) rather than the court, a receiver’s primary role is to collect and sell secured assets to benefit the lender. The 2014 Companies Act grants additional statutory powers for all-assets receivers, enabling broad control over the company’s operations.

Types of Charges and Powers

A fixed and floating charge over all assets allows the receiver to control and potentially sell the entire business. In contrast, a fixed charge receiver only manages specified assets. Receiver rights and powers stem from the debenture deed, allowing them to act as agents of the company, though without any duty to keep the company or business operational.

Grounds and Process for Appointment

Grounds for receiver appointment are defined in the debenture and usually include loan defaults, insolvency signs, or other breaches. Receivership effectively “crystallises” floating charges into fixed ones, securing assets against third-party claims. The receiver’s authority includes asset disposal and decision-making in the lender’s best interests.

Court Oversight and Remuneration

While most appointments are non-court-based, courts can also appoint receivers where security is jeopardized. Receiver remuneration, usually set in the debenture, can be challenged or revised by the court to prevent excessive fees, especially during liquidation.