A company most commonly goes into receivership when a receiver is appointed by a secured creditor who holds security over some or all of the company’s assets. The receiver’s primary role is to collect and sell sufficient of the company’s charged assets to repay the debt owed to the secured creditor.
What is the receiver’s role?
The receiver’s role is to:
- collect and sell enough of the charged assets to repay the debt owed to the secured creditor (this may include selling assets or the company’s business)
- pay out the money collected in the order required by law, and
- report to ASIC any possible offences or other irregular matters they come across.
The receiver’s primary duty is to the company’s secured creditor. The main duty owed to unsecured creditors is an obligation to take reasonable care to sell charged property for not less than its market value or, if there is no market value, the best price reasonably obtainable. A receiver also has the same general duties as a company director.
The receiver has no obligation to report to unsecured creditors about the receivership, either by calling a meeting or in writing. However, the receiver will usually write to all of the company’s suppliers to inform them of their appointment. Unsecured creditors are not entitled to see the receiver’s reports to the secured creditor.
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