Administrative Receivers are appointed with a view to selling assets of the company in order to repay the sums owed to a secured creditor.
When a company breaches the terms of its borrowing from a secured creditor, with a floating charge over a considerable proportion of the company’s assets, that creditor may appoint an Administrative Receiver (a Licenced Insolvency Practitioner) to recover the monies owed.
Many companies typically granted both fixed and floating charges over all of a company’s assets and undertakings to lenders as security for their borrowing.
Administrative Receivership is often referred to simply as ‘Receivership’, and can only be applied where the floating charge was created on or before 15 September 2003 – therefore an Administrative Receivership is becoming a less commonly used process.
A Receiver appointed specifically under a fixed charge generally has more limited powers as they can only deal with the fixed charge property and not the business generally. A fixed charge Receiver may also be referred to as an LPA Receiver, where the Receiver is appointed under the Law of Property Act 1925 to take back control of the property covered by the charge where the borrower has defaulted on the terms of its loan.
LPA Receivership is not a formal Insolvency procedure under the provisions of the Insolvency Act and should therefore not be confused with Administrative Receivership. It is not therefore necessary to appoint a Licenced Insolvency Practitioner as Receiver, DFW Associates are however still able to act in such a capacity.