How can money be recovered?
Receivership is a method for charge holders to recover monies from companies where a loan under a debenture is in arrears or some other event has happened by which, under the terms of the debenture, the security becomes enforceable, for example the company has gone into liquidation or the security is in jeopardy.
Types of appointments
- the most common type of appointment is where a receiver is appointed by a debenture holder on foot of a debenture document;
- a receiver may be appointed by the High Court under specific statutory powers such as that contained in the Conveyance Act 1881;
- a receiver may also be appointed by the High Court under its equitable jurisdiction under the Supreme Court of Judicature Act (Ireland) 1877; or
- a receiver may be appointed under the Rules of the Superior Courts, in this case a receiver may not be appointed by reference to a charge at all and indeed no charge is necessary for his appointment.
Receiver - powers, duties, functions
- on the appointment of a receiver by a debenture holder, the receiver will take possession of the charged assets, realise those assets and discharge the debt owing to the debenture holder;
- depending on the terms of his appointment a receiver may continue the business with a view to maximising the value of the company’s assets, sell the business as a going concern or sell part of the business whilst winding down the unprofitable part;
- a receiver must take possession of, collect and secure the property charged by the debenture, and take all and any proceedings in the name of the company or otherwise as may be necessary for that purpose;
- a receiver must exercise care in disposing of the company property;
- a receiver may carry on or concur to carrying on of the business where he is appointed receiver and manager;
- a receiver may make arrangements or compromises which are in the interests of the debenture holder, the debenture deed should always be consulted to ensure the receiver acts within his stated powers; and
- if a receiver is appointed under a floating charge, he has a duty to pay the preferential creditors in priority to the charge holder.