The Privately-Appointed Receiver
Almost invariably a mortgage or charge over the assets of a company will entitle the creditor to appoint a receiver when default occurs. The appointment of a receiver is an effective procedure when the company has defaulted in its obligations to pay money to the creditor.
A receivership is not just the province of big banks and financial institutions. Whenever you lend money to a company even your own company, you should take a company charge and that charge should give you the right to appoint a receiver. Generally, we will recommend an insolvency practicioner familiar with company insolvency issues to act as receiver as the agent of the company to recover the money owed under the charge.
Likewise if you are dealing with a company to which a receiver or a liquidator or voluntary administrator has been appointed you should get immediate legal advice on your rights and entitlements and the companyâs rights and abilities to deal with its assets. Please contact us urgently if you find yourself in these circumstances.
The Court-Appointed Receiver
A court-appointed receiver might be considered appropriate in circumstances:
- Where a mortgagee’s security is enforceable
- Where any secured property is in jeopardy although the mortgage is not yet enforceable
- Where property, other than that the subject of a mortgage, is in jeopardy
- Where a creditor’s debt could not be recovered by ordinary execution at law
A court appointed receiver has a power of management authorising the entry into contracts. As such a receiver contracts as principal and is personally liable, but has a right of indemnity out of the assets in respect of liabilities properly incurred together with an equitable lien over the assets controlled by the receiver to secure that right of indemnity.
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