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Creditor Instigated Corporate Insolvency - Receivership

Where the recalcitrant directors of a company refuse either to acknowledge that a company is insolvent or to place the company into some form of insolvency administration, creditors or the other directors may be forced to initiate the action themselves.

When creditor instigated administrations come into being, there is generally some semblance of hostility present, either from management or staff. This calls for a combination of assertiveness and interpersonal skills.

In this regard, the ethos of this firm puts us in good stead in restoring the confidence of employees and suppliers, especially where the business may be carried on.

Receivers are generally appointed by secured creditors although there are limited circumstances when Receivers may be appointed by the court. This option is available when a creditor holds a charge or security over company property.

When appointed by a secured creditor, the primary duty of the Receiver & Manager is to recover funds owing to secured creditors. The Receiver does not have any direct responsibility to unsecured creditors and to shareholders, although indirectly, under his duty of care, he may have.

Receivers may continue to trade on, however, should they do so, they may be personally liable for any debt incurred during that process should the company assets be insufficient to pay those debts.

As a consequence, receivers seek to obtain indemnities from those wishing to appoint them.

 

 

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