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Company Insolvency – Administrative Receivership

Administrative Receivership is a process initiated and controlled by a secured creditor (normally a bank), which is unsure that its debt is going to be repaid by the borrower.

Administrative Receivers are appointed to sell the assets of the company in order to repay the sums owed to the secured creditor. It is a procedure used increasingly less often because the security (usually a debenture) under which such receivers are appointed must have been dated before 15 September 2003.

A debenture is the most common type of collateral given by a borrower to a lender to secure its debt. It usually gives the lender both fixed and floating charges over all of a borrower’s assets. By taking a debenture, a lender not only feels that their debt is safer, but it gives them a mechanism for taking control of the assets through the appointment of Administrative Receivers, who then sell them to repay all or as much of the outstanding debt and interest as possible.

Preventing your company from being forced into Administrative Receivership depends on far the lender has gone towards appointing Receivers and how quickly you take action after becoming aware that the secured creditor is planning to make such an appointment. If you have already breached the terms of your banking or loan agreement, you should contact us as soon as possible to discuss the alternative options which may still be available. Opus Restructuring has good relationships with most lenders and will be able to enter into a constructive dialogue with them about the best way forward for them and for your company and its other stakeholders.

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