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 the debt owed to the secured creditor by realising and selling company assets. Court-appointed receivers can also be used in dispute circumstances.
In the situation where a company is unable to pay its debt and secured creditors intend to recover money owed or where an interested party such as a shareholder, director or investor makes an application to Court to recover the debt owed, a receiver will be appointed to administer the process of recovering the debt owed.
Where management does not have the skill set to continue operating where there is ongoing financial strain often from past activity or where there is pressure from creditors for unpaid debts, the receivership process may be used.
Major failure in business control and management systems, disputes between directors and shareholders, defaults on loan repayments to secured lenders and ongoing losses and an inability to improve trading performance may also result in a receivership.
In 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 the business as a 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. After the receivership ends, the receiver resigns or is discharged by the secured creditor. Unless another external administrator has been appointed, full control of the company and any remaining assets return to the directors.
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.