Administration – What is an administrative receiver?

When your company borrows money, the lender is usually given some security over your company’s assets to guarantee payment. This type of lender is called a secured creditor. If you fail to keep to the terms of the loan, the lender may be entitled to appoint an administrative receiver.

An admin istrative receiver is a type of insolvency practitioner. Once appointed, the administrative receiver has control of your company’s property and wide powers over your business.

The administrative receiver is mainly concerned with getting back the money owed to the secured creditor. The administrative receiver may sell the assets piecemeal, or sell the whole business as a going concern to pay off the secured creditor and cover the costs of the receivership.

The differences between administration and administrative receivership

When the administration process is used to rescue a business as a going concern, the process is designed to protect a company from its creditors while a restructuring plan is completed. Control of the business is handed over to an insolvency practitioner appointed by the courts.

Administrative receivership is a process initiated by secured creditors who have lost faith in a company’s ability to repay its debts. Control of the business is handed over to an administrative receiver, who looks to sell the company’s assets so that credi tors can recover money owed to them.

Unsecured creditors cannot begin the administrative receivership process. They can, however, begin the administration process by applying to the court for an administrator to be appointed.

More information

• Administration – What is administration?
• Administration – The administration process
• Administration – What is a composition order?
• Administration – Voluntary and involuntary administration
• Administration – The advantages of administration
• Administration – The disadvantages of administration
• Administration – I can’t afford to make my administration payments
• Administration – The alternatives to administration
• Administration – Insolvency and administration