Administrative Receivership
Only certain parties may appoint Administrative Receivers. These are people or organisations that hold a floating charge over substantially all of the assets of the company and the charge is dated prior to 15 September 2003.
Due to these limitations the number of Administrative Recieverships are likely to reduce over time.
Administrative Receivers are appointed primarily to recover the money owed to the chargeholders of the company, although they do also have a responsibility to preferential creditors (employee claims). Therefore receivers often appear to act more aggressively towards the general body of creditors.
Once appointed the Administrative Receiver may seek to sell, close or continue the trade of the business.
The receiver must inform creditors of their appointment within 28 days and circulate a report and convene a meeting of creditors within 3 months. The exception to this is if a liquidator has been appointed.
It is possible that a liquidator can be in office at the same time as an Administrative Receiver but it is usually the receiver that keeps control of the company's assets. Sometimes creditors seek the appointment of a liquidator to fully investigate the affairs of the company or to review the actions and remuneration of the receiver.
The Administrative Receiver has no power to agree creditor claims or pay dividends to them (except those that are preferential). If there are funds available after paying back the bank, the costs and the preferential creditors then the Administrative Receiver will normally petition for the winding up of the company or persuade the shareholders to place it into liquidation. It is then the liquidator who would pay dividends. The liquidator cannot be the Administrative Receiver.
Once the Administrative Receivership is complete, control is passed back to the directors or liquidator, if in office.
