Receivership Part One Flashcards
What is receivership?
A remedy for secured creditors allowing the sale of secured assets to recover debt.
How can a receiver be appointed?
By the court (if security is in jeopardy) or via debenture contract.
What is the difference between a receiver and a receiver-manager?
A receiver sells assets; a receiver-manager can also run the business.
Who can be a receiver under s.433 CA 2014?
Not undischarged bankrupts, recent officers/relatives, or corporate bodies.
What happens if the receiver is appointed invalidly?
The appointment is void; receiver may be a trespasser (Merrow Ltd v BoS).
What duties does the debenture holder owe?
Act in good faith, appoint a competent receiver, no duty to company or unsecured creditors.
Can directors act after a receiver is appointed?
Only regarding assets not under receivership (Lascombe v UDT).
Can receivers terminate employment contracts?
Yes, but must comply with employment law and redundancy regulations.
What is the effect of appointing a receiver?
Floating charges crystallise, directors’ powers are suspended over charged assets.
Is the receiver personally liable for contracts?
Yes, unless indemnified by the debenture or explicitly excluded.
Who does a debenture-appointed receiver act as agent for?
Typically the company, though acts in interest of the debenture holder.
What are the main powers of a receiver-manager?
Sell assets, run the business, hire/fire staff, borrow money, insure property.
What must the company do upon receiver appointment?
Notify CRO, publish notice, and submit a Statement of Affairs (within 14 days).
What must a receiver report to the CRO?
Company status, assets sold, and sale proceeds – within 2 months of appointment.
Can a receiver be dismissed by the company?
No – only the debenture holder or the court (if court-appointed) can remove them.
