In times of financial difficulties

Corporate Recovery and Insolvency terminology

Administrative Receiverships

A holder of floating charge, e.g. a bank with a debenture over a company’s business and assets, can appoint an Administrative Receiver (subject to the following paragraph) to take control of the business and secure those assets whilst usually attempting to sell the business as a going concern. Unsecured creditors’ claims are frozen at the date of appointment and fall to be dealt with by a subsequently appointed liquidator.

The Enterprise Act 2002 has prohibitated the appointment of Administrative Receiverships, in most cases, unless the right to appoint was given in a charge document/debenture existing prior to 15 September 2003. Holders of qualifying floating charges created after that date have the right to appoint Administrators but not Administrative Receivers.

Other forms of Receivership exist e.g. Fixed Charge Receivers or LPA/Law of Property Act Receivers who are appointed over specific assets such as a particular property or major piece of plant or equipment rather than over the business and assets as a whole. A Receiver could also be appointed over a company’s book debts in certain circumstances, e.g. if the debts have been discounted or factored.