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 or Colin Churchward, Head of Debt Recovery.