In the main, Administrative Receivership’s have been abolished and are now only applicable to those companies who have a fixed and floating debenture which is registered prior to the 15 September 2003, when the Enterprise Act 2002 came into force.
The administrative receiver is appointed by the debenture holder (usually a bank) who then takes over the assets which are secured by the debenture.
Once appointed the receiver acts as an agent of the company who can dispose of the assets which are subject to the charge (which is usually all of them, including book debts, goodwill, stock, plant and machinery, office equipment etc.) and then pass the sales proceeds to the bank.
An administrative receiver has no interest in dealing with the unsecured creditors of a company and therefore a liquidator has to be appointed to deal with any of the claims. A company can be placed into liquidation whilst an administrative receiver is in office, however this will not necessarily effect the receivership. Once a liquidator is appointed which cannot be the administrative receiver then the liquidator can investigate the actions of the officers of the company.
In accordance with the Law of Property Act 1925 and Insolvency Act 1986 a receiver can be appointed over a fixed charge.
A receiver can be appointed by the mortgagee once the company has defaulted in making the necessary payments to the mortgage company. Once the receiver is appointed, all rental payments which are due under the mortgage deed are paid to the receiver who then pay this over to the mortgage company.
The powers of the LPA Receiver are to demand and collect rental income, and with the agreement of the mortgagee the terms on which the property can be sold.
The receiver cannot trade a business and his powers are only limited to dealing with property.
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