Company receivership is when a receiver is appointed by a secured creditor to assume control over the company. Their purpose is to collect and sell the company’s assets in order to repay the debts owed to the secured creditor. The receiver will sell the assets for the benefit of the secured creditor at a price equivalent to its market value; if an asset does not have a market value, for the best price reasonably obtainable having regard to the circumstances existing when the asset is sold.
In a receivership, the appointed receiver’s duty is to this secured creditor, and as such, their position may include selling the ‘whole business’ as an ongoing concern.
The appointed receiver must report any possible offences that they observe in the business to the Australian Securities & Investments Commission (ASIC). They must also provide a detailed list of receipts and payments for the receivership to ASIC.
Can a company still trade even if it has entered into a receivership?
Receivership differs from liquidation in that the company can still continue to trade. In addition, the company director may still be in control of the business, though their powers may be limited depending on the situation and the amount of influence that the receivership has. This is what make receivership different from other forms of external administration.
CRS are experts in the field, and can help you to understand and work through any aspect of corporate insolvency, such as receivership. If you would like to find out more information about company receivership, then please contact us for free and confidential advice on 1800 210 073.