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Company Insolvency – Fixed Charge (LPA) Receivership

When a lender has a fixed charge such as a mortgage over a property or other assets like intellectual property or the goodwill of a business, it will usually have the power to appoint a Receiver to take control of the asset and sell it on behalf of the lender to repay its debt. This type of receiver can only deal with the assets charged but often also has extensive powers to run the business located at the property and divert the business income to the lender. A fixed charge Receiver is also sometimes described as an LPA Receiver where they have been appointed under the Law of Property Act 1925.

LPA receivership is not a formal insolvency procedure and should not be confused with Company Administrative Receivership. While LPA receivers are often appointed where the borrower has failed to repay a loan, this can also happen when there have been other breaches of the loan agreement, for example, when a loan-to-value or an interest cover covenant can no longer be met by the borrower.

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