Receivership

Receivership is often confused with liquidation.

A company will generally be placed into receivership by a secured creditor, or in special circumstances by the Court. The secured creditor can appoint a receiver because they hold a security interest over a company’s assets that allows them to appoint a receiver. The powers of the receiver are set out in the security agreement, appointment documentation and the Corporations Act. Under the terms of their appointment, if a receiver has the power to manage the company’s affairs, they are known as a receiver and manager or a managing controller.

The receiver’s main duty is to the secured creditor that appointed them. Generally, the receiver’s role is to:

  • collect and sell enough of the secured assets to repay the debt owed to the secured creditor (this may include selling assets or the company’s business)
  • pay out the money collected in the order required by the Corporations Act
  • report possible offences or other irregular matters they come across to ASIC.

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