A receivership is a type of insolvency that occurs when a secured lender, such as a bank with security over company assets, wishes to recover its loan. In this situation, the secured creditor will appoint a receiver to administer the process of recovering debt owed to the secured creditor by realising and selling company assets. Court appointed receivers can also be used in dispute circumstances.
What causes a Receivership?
- In the situation where a company is unable to pay its debt and secured creditors intend to recover money owed
- In the situation where an interested party such as a shareholder, director or investor makes an application to Court to recover debt owed
- Pressure from creditors for unpaid debts
- In the situation where management does not have the skill set to continue operating where there is ongoing financial strain often from past activity
- Major failure in business control and management systems
- Disputes between directors and shareholders
- Defaults on loan repayments to secured lenders
- On-going losses and inability to improve trading performance
What are the expected outcomes of a Receivership?
- An independent person controls and manages company assets to recover all or part of the debt for a secured creditor
- Pending on circumstances, there is potential to trade on the company and sell business as going concern
- A receivership usually ends when the receiver has collected and sold all of the assets or enough assets to repay the secured creditor, completed all their receivership duties and paid their receivership liabilities.
- The receiver resigns or is discharged by the secured creditor after the receivership ends. Unless another external administrator has been appointed, full control of the company and any remaining assets return to the directors.
How can SV Partners help?
In the role of a Receiver, SV Partners are able to manage the process of realising assets in order to recover debt for the secured creditor. Our team has extensive experience throughout many complex scenarios in order to effectively reach a resolution for all stakeholders. We have proven success working with banks, secured lenders and company directors to assist companies throughout a receivership. Visit our FAQ section if you would like more details on receiverships or alternatively, contact our confidential assist line on 1800 246 801 to discuss your situation with our experts.