The three types of Receivership
Written by Nicholas Barnett, Director of Libertas Associates
Administrative Receivership
An Administrative Receiver must be a qualified Insolvency Practitioner and is appointed by the holder of a floating charge, over the whole, or substantially the whole of the Company’s property.
The appointment is governed by the detail included in the security documentation which will set out or limit the Administrative Receiver’s powers, albeit addition powers derive from the Insolvency Act 1986.
The purpose of the Administrative Receiver is to take control of the Company in order to maximise realisations for the appointor, however they also have obligations in relation to other creditors.
Fixed Charge Receiver
A Fixed Charge Receiver is appointed by the holder of a fixed charge to deal with only the specific assets that they hold a charge over. This is not an Insolvency process and thus is regulated by the Law of Property Act 1925. As a result, the appointee need not necessarily be a qualified Insolvency Practitioner.
A Fixed Charge Receivers’ power is restricted purely to collecting in income over the charged property, and they are remunerated on the basis of 5% of realisations.
LPA Receiver
An LPA (Law of Property Act) Receiver is appointed by the holder of a fixed charge to deal with only the specific property assets that they hold a charge over. This is not an Insolvency process and this is regulated by the Law of Property Act 1925. As a result, the appointee need not necessarily be a qualified Insolvency Practitioner.
An LPA Receivers’ power is restricted purely to collecting income over the charged property, and they are remunerated on the basis of 5% of realisations.
The information above, is a brief description of the Receiverships. For more information and to get specialist advice from a firm of Licensed Insolvency Practitioners, please do not hesitate to contact us or click on the following link for more information.
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