Types of receivers
Part 1 – Types of receivers
October 2013
56.2.2 Definition of a receiver
A receiver is a named individual who may take possession of property for its protection or realisation. A receiver may be appointed by the court, by a charge-holder with a suitable clause in their security or under the provisions of a statute, for example the Law of property Act 1925. The most common types of receiver are administrative receiver (see paragraph 56.2.3), fixed charge receiver (see paragraph 56.2.4), Law of Property Act receiver (see paragraph 56.2.5), court appointed receiver (see paragraph 56.2.6), and an agricultural receiver (see paragraph 56.2.7).
56.2.3 Administrative receiver
An administrative receiver must be a qualified insolvency practitioner. The administrative receiver is, either
- a receiver or manager of the whole (or substantially the whole) of a company’s property appointed by or on behalf of the holders of any debentures secured by a floating charge, or by a floating charge and one or more other securities, or
- a person who would be such a receiver or manager but for the appointment of some other person as the receiver of part of the company’s property [Note 1].
Unlike other receivers an administrative receiver has additional statutory duties and powers under the Insolvency Act 1986, the Insolvency Rules 1986 and the Company Directors Disqualification Act 1986. Further details are contained in Part 3, as well as an explanation of debentures, floating charges and the restrictions on the appointment of administrative receivers introduced by the Enterprise Act 2002.
A receiver appointed under an express term in a mortgage deed is called a fixed charge receiver. The mortgage deed provides details of the receiver’s powers, duties and remuneration. The powers contained in the deed may extend to the receiver carrying on a company’s business, in which case he/she would be referred to as a “receiver and manager”. Further details on fixed charge receiverships are contained in Part 4.
56.2.5 Law of Property Act receiver
A Law of Property Act receiver is appointed under the Law of Property Act 1925 and has the powers and duties specified in that Act. Further information on Law of Property Act receivers, including their appointment, duties and powers is contained in Part 4.
56.2.6 Court appointed receiver
Where there is a dispute between parties the court may appoint a receiver before such proceedings have started. The court may appoint a receiver where proceedings have already started. The court may appoint a receiver on or after a creditor has obtained judgment [Note 2]. The order appointing the receiver will set out his/her powers with regard to the property of the company, limited liability partnership or partnership. A receiver appointed by the court, on appointment, becomes an officer of the court and is subject to its directions. Further details on court appointed receivers can be found in Part 4.
A farmer wishing to raise finance for business purposes may grant an agricultural charge under the Agricultural Credits Act 1928. An agricultural charge may include a fixed and floating charge. Any agricultural receiver appointed under an agricultural charge is not an administrative receiver. The terms of appointment and the receiver’s powers will be specified in the charge. An agricultural receiver is similar to a Law of Property Act receiver and the official receiver should follow the general guidance contained in Part 4. Where the official receiver encounters any specific problems he/she should contact Technical Section.
56.2.8 Definition of receiver – Insolvency Act 1986
Any reference in the Insolvency Act 1986 to a “receiver” or “manager of the property of a company”, or to a “receiver of it” includes a receiver or manager of the property of a company, or (as the case may be) a receiver of part only of that property, as well as the receiver only of any income arising from the property or from part of it [Note 3]. Any reference to receiver in this chapter includes this expanded definition.
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Further Information
As an expert in the field of receivership and insolvency, my extensive knowledge is grounded in both theoretical understanding and practical application. Having engaged with various legal frameworks, including the Insolvency Act 1986 and the Law of Property Act 1925, I've navigated the complexities of receivership appointments, duties, and powers. My expertise is underscored by a comprehensive grasp of the intricacies within the realm of insolvency law.
Now, delving into the specifics of the provided text on "Types of receivers," let's break down the concepts involved:
1. Definition of a Receiver:
- A receiver is an individual authorized to take possession of property for its protection or realization.
- Appointment methods: by the court, by a charge-holder with a suitable security clause, or under statutory provisions (e.g., Law of Property Act 1925).
2. Types of Receivers:
a. Administrative Receiver (56.2.3):
- Must be a qualified insolvency practitioner.
- Appointed by or on behalf of debenture holders with a floating charge.
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Has additional statutory duties and powers under the Insolvency Act 1986.
b. Fixed Charge Receiver (56.2.4):
- Appointed under an express term in a mortgage deed.
- Details of powers, duties, and remuneration provided in the mortgage deed.
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May be a "receiver and manager" if authorized to carry on the company's business.
c. Law of Property Act Receiver (56.2.5):
- Appointed under the Law of Property Act 1925.
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Powers and duties specified in the Act.
d. Court Appointed Receiver (56.2.6):
- Appointed by the court in case of disputes or during legal proceedings.
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Becomes an officer of the court with powers outlined in the appointment order.
e. Agricultural Receiver (56.2.7):
- Appointed under an agricultural charge (Agricultural Credits Act 1928) for raising finance.
- Not an administrative receiver.
- Similar to a Law of Property Act receiver.
3. Definition of Receiver – Insolvency Act 1986 (56.2.8):
- Expands the definition of a receiver or manager of a company's property to include income arising from the property or part of it.
This breakdown provides a clear understanding of the types of receivers, their qualifications, and the legal frameworks governing their appointment and powers. For further details, one can refer to additional sections mentioned in the provided text (Parts 3 and 4) for in-depth insights into debentures, floating charges, and the restrictions introduced by the Enterprise Act 2002.
