Administrative Receiver:
Noun: A professional appointed by a secured creditor, typically a bank or financial institution, to take control of a company’s assets and operations in order to recover outstanding debts. An administrative receiver is usually appointed when a company is in significant financial distress and is unable to meet its financial obligations. The receiver’s primary objective is to maximize the recovery of funds for the secured creditor by selling the company’s assets or restructuring its operations. The administrative receiver has extensive powers and responsibilities, including the ability to manage the company’s affairs, make decisions regarding its operations, and sell assets to repay the outstanding debt. This role is typically temporary and ends once the receiver has fulfilled their duties and the debt has been repaid or resolved.
An administrative receiver is a person appointed by a secured creditor to take control of a company’s assets and operations in order to recover the debt owed to the creditor. This appointment is typically made under the terms of a debenture or other security agreement.
The administrative receiver has broad powers to manage and sell the company’s assets, including the power to dismiss employees, negotiate with creditors, and take legal action on behalf of the company. Their primary duty is to act in the best interests of the secured creditor and to maximize the recovery of the debt owed.
The appointment of an administrative receiver typically occurs when a company is in financial distress and is unable to meet its debt obligations. It is a form of insolvency procedure that allows the secured creditor to take control of the company’s affairs and assets, with the aim of recovering the debt owed.
The administrative receiver is required to comply with various legal obligations, including the duty to act in good faith, exercise reasonable care and skill, and avoid conflicts of interest. They are also subject to oversight by the court and may be removed from their position if they fail to fulfil their duties.
It is important to note that the role of an administrative receiver is distinct from that of an administrator or liquidator. While an administrator is appointed to rescue the company as a going concern or achieve a better outcome for creditors, and a liquidator is appointed to wind up the company’s affairs and distribute its assets, an administrative receiver’s primary focus is on recovering the debt owed to the secured creditor.
Overall, the appointment of an administrative receiver provides a mechanism for secured creditors to take control of a company’s assets and operations in order to recover the debt owed to them. It is a powerful tool that can have significant implications for the company and its stakeholders.
Q: What is an administrative receiver?
A: An administrative receiver is a professional appointed by a secured creditor to take control of a company’s assets and operations in order to recover the debt owed to the creditor.
Q: When is an administrative receiver appointed?
A: An administrative receiver is typically appointed when a company defaults on its secured debt, usually in the form of a debenture or a fixed charge.
Q: What powers does an administrative receiver have?
A: An administrative receiver has the power to manage and sell the company’s assets, negotiate with creditors, terminate contracts, and take legal action on behalf of the company.
Q: What is the goal of an administrative receiver?
A: The primary goal of an administrative receiver is to recover the debt owed to the secured creditor. However, they also have a duty to act in the best interests of all creditors and stakeholders.
Q: Can an administrative receiver save the company from insolvency?
A: While an administrative receiver has the power to continue trading the company, their primary focus is on recovering the debt owed to the secured creditor. Saving the company from insolvency is not their main objective.
Q: How long does the role of an administrative receiver last?
A: The duration of an administrative receiver’s appointment depends on various factors, including the complexity of the case and the time required to recover the debt. It can range from a few weeks to several months.
Q: Can a company continue trading under the control of an administrative receiver?
A: Yes, an administrative receiver has the power to continue trading the company if it is deemed beneficial to the recovery of the debt owed to the secured creditor.
Q: What happens to the employees of a company under administrative receivership?
A: The fate of the employees depends on the specific circumstances. In some cases, the company may continue trading and retain its employees. However, if the company is sold or ceases operations, the employees may face redundancy.
Q: Can a company challenge the appointment of an administrative receiver?
A: Yes, a company can challenge the appointment of an administrative receiver if they believe it was made improperly or unfairly. However, such challenges are subject to legal processes and require valid grounds.
Q: How does an administrative receiver get paid?
A: An administrative receiver’s fees and expenses are typically paid from the proceeds of the assets they sell or recover. They are entitled to reasonable remuneration for their services, subject to approval by the court and creditors.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March 2024.
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