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Receivership

At APL Insolvency we specialize in helping business owners when their company is facing insolvency. We understand both the challenges and responsibilities directors must deal with including the need to take action when their company is having difficulty paying its debts.

If your company is experiencing financial difficulty, the team at APL is here to help you understand the options that may be available.

If your company is having difficulty paying secured debt or if a secured creditor has appointed a receiver over the assets of your company, talk to us today to discuss your available options.

Here is some information about the receivership process to help you understand more about receiverships.

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What is a Receivership?

A receivership is an appointment made by a secured creditor seeking repayment of their outstanding debt.

If your company has not been repaying secured debt owed to a creditor such as a bank or a finance company, the appointment of a receiver is a possibility. A secured creditor holding a ‘registered security interest” over your company’s assets has the right to take this route to seek repayment of their outstanding debt if you have defaulted on repayments: (A registered security interest may be held over property such as land and plant & equipment or over assets such as book debts, cash and stock.)

Once appointed, a receiver has the power to trade the business, sell the company’s assets, collect outstanding debts or otherwise recover funds to repay the secured creditor’s debt, much like the powers of a liquidator or external administrator. However, unlike a liquidator or external administrator, a receiver is concerned strictly with debt owed to the secured creditor who appointed them (ie:the lender or financial institution) and is not required to act in the interests of the company’s unsecured creditors.

Funds recovered by a receiver are distributed according to priorities set out in the Corporations Act 2001, in which funds are repaid to the secured creditor after payment of the fees of the receiver (and in certain circumstances, after payment of priority amounts such as outstanding superannuation or employee entitlements).

Person using a calculator
 

What are the potential outcomes of a Receivership?

The best-case scenario if your company goes into receivership is that there are sufficient funds available for your secured creditors to get repaid (and to pay the receiver’s fees) and control of the company then returns to you. In this unlikely event, the directors regain their full power, employees keep their jobs, and you can carry on with a focus on your business and re-establishing the company’s financial footing.

More commonly however, the receiver will not only collect the company’s outstanding debts but also sell its valuable assets or possibly sell the business itself to raise funds for the secured creditor. That is, you run the risk of your entire business being sold to cover the secured debt.

A receivership can be a difficult process for directors, yet it possibly can be avoided by seeking expert advice as soon as there is even a remote threat of insolvency.

The best way to protect your company is to seek advice early!

If your company is experiencing financial difficulties, now is the time to act.

At the first signs of financial stress, it is always best to seek advice from an experienced insolvency practitioner who can advise regarding the available options to help you maintain control of your company and deal with its debt and financial struggles. The sooner you speak to an insolvency expert, the more options may be available to you to help your company survive.

If your company is having difficulty maintaining payments to your secured creditors, it is important that you seek advice from an insolvency expert as soon as possible to discuss the available options.

APL Insolvency has over 20+ years of experience in dealing with receiverships and other forms of corporate insolvency.

If you are interested in learning more about receiverships and how a receivership can impact your company, contact APL Insolvency today to arrange a free, no-obligation options assessment consultation.

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