Receiverships

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

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.)

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).

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.

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.