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Receivership


This note gives an overview of the types of receiverships available and some of the effects of appointing a receiver.

The appointment of a receiver is a remedy for creditors and other third parties to protect their interest in assets. They can be appointed by a court, or by a vesting document, and their powers are usually limited to the appointment document, compared to other office-holders such as liquidators and administrators.

Types of receivership

There are several different types of receivers:

  1. •

    fixed charge receiver or Law of Property Act receiver (LPA receiver)

  2. •

    administrative receiver

  3. •

    court-appointed receiver

  4. •

    Proceeds of Crime Act receiver

  5. •

    Agricultural Credits Act receiver

For more detailed information, see Practice Note: Receivership—an introductory guide.

Fixed charge receiver or Law of Property Act receiver (LPA receiver)

A mortgagee can appoint an LPA receiver pursuant to section 101(1)(iii) of the Law of Property Act 1925 (LPA 1925) whereas a fixed charge receiver is appointed pursuant to the terms of the fixed charge contained in the security document. The terms LPA receiver and fixed charge receiver are often, confusing, used interchangeably. In practice,

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Restructuring & Insolvency analysis: The court dismissed the applicants’ applications to remove and replace the joint administrators. The administrators’ decisions fell within the range of decisions that were open to them, even though further renegotiations with the secured creditor (Desiman) and the purchaser’s ‘chipping’ at the purchase price during turbulent economic conditions eroded the prospect the applicants would receive an economic return in the administration. In that respect, Desiman could be said to have driven a hard commercial bargain, but that was not a circumstance for which the administrators were ultimately responsible. Nor was it sufficient for any of the allegations to be made out. Written by Samuel Parsons, barrister at Erskine Chambers.

Court of Appeal clarifies when a dissolved partnership may bring litigation (Flohr v Frontiers Capital I Ltd Partnership)

Restructuring & Insolvency analysis: The Court of Appeal has confirmed that the authority to bind a firm for the purposes of its winding up (conferred on partners after the dissolution of a partnership by section 38 of the Partnership Act 1890 (PA 1890)) applies to pursuing causes of action which accrued prior to dissolution. Whether PA 1890, s 38 will permit partners of a dissolved partnership to pursue litigation post-dissolution is a fact sensitive question. The question is whether such litigation is reasonably required in all the circumstances to wind up the affairs of the partnership. Relevant considerations are not circumscribed and will include considerations of prospects of success and cost-effectiveness. In Flohr, the Court of Appeal confirmed a general partner of a limited partnership governed by the Limited Partnership Act 1907 (LPA 1907) was empowered to sue a third party on behalf of the partnership notwithstanding the dissolution and winding up of the partnership. This was so even though the relevant cause of action arose prior to dissolution. Written by James Fagan, Barrister, at Radcliffe Chambers.

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