Administrative Receiverships

An administrative receivership appointment can be made when a company has breached the terms of a loan or other credit facility from a creditor with a floating charge (usually a bank or other financial institution). The main function of an administrative receiver would be to utilise his or her extensive powers over the charged assets to recover sufficient funds to pay the costs of the receivership, preferential creditors (certain employee claims) and the charge holder.

Although once customarily used by lenders and other charge holders, these appointments are now particularly rare as they can only be made if the floating charge existed prior to 15 September 2003. A creditor with a more recent charge has the preferable option of placing the company into administration.