Receivership and Insolvency – The key Questions

In our blog post yesterday, we looked at the area of examinerships and today we will consider the area of Receiverships and how they apply in the context of insolvency arrangements. Again for ease of reading we have set out below some key questions and issues to consider.What is a Receiver?In essence a receiver is a person appointed to “receive” a debtors assets and realise that asset on behalf of and for the benefit of a creditor who has an entitlement over that asset. It is usually a practising accountant and a receiver may be appointed in respect of an individual or a company.Are there different types of receivers?Yes there are three types of receivers, namely(a) Statutory receivers appointed under Section 19 of the Conveyancing Act 1881/Section 108 of the Land and Conveyancing Law Reform Act 2009 or Section 148 of the National Management Agency Act 2009.(b) Court appointed receiver – This is an officer of the court with wider duties and depends on the order made by the court.(c) Contractual receiver – A secured creditor like a bank can appoint a receiver via a Deed of Appointment on foot of a debenture or charge. This gives the receiver specific powers to take charge of the assets and realise the value of those assets in the event of default in repayments.How is a receiver appointed?In general once a default such as arrears occurs, the bank will generally enter into correspondence with the borrower and a pre-appointment demand letter is sent. A Deed of Appointment is prepared and executed by the charge holder and receiver in accordance with the terms of the mortgage.It should be noted that notice of the appointment of a receiver must be published in the Irish Oififuil and a daily newspaper within seven days of the appointment and the Companies Registration Office must also be notified within seven days.It is possible to challenge the appointment of a receiver where for example, there is an invalid loan agreement, unclear terms, the Deed of Appointment is invalid or there is an invalid loan agreement.What contractual and statutory powers does a receiver have?The contractual powers of a receiver generally include (a) the power to take possession of the property (b) to receive rents (c) to sell the property and (d) to generally act a receiver manage and have the power to carry on the business of the Company.The statutory powers of a receiver include the receiver acting as agent of the mortgagor and the power to demand and recover all of the income to which the appointment relates as set out under Section 108 of the Land an Conveyancing Law Reform Act 2009. The Receiver may also apply to the Court for directions under Section 438 of the Companies Act 2014. The receiver must also try and obtain the best price available for the assets in question as set out under Section 439 of the Companies Act 2014.Tomorrow we will consider the area of Liquidations including Members Voluntary Liquidations, Creditors Voluntary liquidations and Court Ordered Liquidations.Thank you for reading our blog post and if you have any queries or concerns please do not hesitate to contact us by ringing the office on +353 1 5175000 or sending us an email to wendy@wdsolicitors.ie