For receivership to happen there has to be a secured loan involved.

Creditors who lend to borrowers [companies or individuals] will usually take security over a borrower’s assets in return for giving the loans – this is to increase its chances and getting paid. Assets can include property, machinery or produce.

A receiver is an individual who is appointed when a borrower is not complying with the terms of a loan agreement which means that a debt then becomes repayable.

The receiver takes charge of the asset and does what they need to in order to get the debt repaid.

A receiver can be appointed at any time and a borrower does not need to be insolvent, where their liabilities exceed their assets, for this to happen but in practice a borrower will often be insolvent.

If you have any further questions in respect of receivership, please contact Angus Ashman, Partner and Head of Dispute Resolution.