An Administrative Receiver is appointed to the company by a debenture holder, who holds a fixed and floating charge over the company’s assets. On appointment, the directors no longer control the company and it is run by the Administrative Receiver.
They have the ability to continue to trade although they may decide not to do so depending on the circumstances. If trading takes place, it will only be to preserve the business with a view to sale. The objective of the Administrative Receiver is generally to realise the assets for the best possible price, with a view to repaying the debenture holder, in particular.
The priority of payments to creditors though is the same as in a Creditors’ Voluntary Liquidation (see separate note).
The Enterprise Act 2002 made administrative receivership less common. It promotes Administration as a far more likely recovery route under a debenture.
This note is meant as a brief overview of Administrative Receivership. It is not a detailed review and further detailed advice should be taken before coming to any decision. No responsibility can be accepted by Campbell Crossley and Davis, its partners or employees for any loss occasioned by any person or persons acting or refraining from action as a result of material contained in this note.