Q&As

At what stage can a company exiting administrative receivership be bound by its directors?

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Published on LexisPSL on 17/05/2017

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • At what stage can a company exiting administrative receivership be bound by its directors?
  • Position of directors during administrative receivership
  • Vacation of office

At what stage can a company exiting administrative receivership be bound by its directors?

This Q&A focuses on the full resumption of the directors' powers following an exit from administrative receivership. We also briefly touched on residual powers of the company’s directors during the currency of the administrative receivership.

This Q&A does not set out the position relating to a liquidation exit or an administration order.

Under the Insolvency Act 1986 (IA 1986), an administrative receiver refers to:

  1. 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 of the company secured either by a charge, which, as created, was a floating charge or by such a charge and one or more other securities, or

  2. 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

See: Introduction: Gore-Browne on Companies [1].

Position of directors during administrative receivership

The appointment of an administrative receiver will cause the floating charge pursuant to which the administrative receiver was appointed to crystallise. As a result, subject as below, the company’s directors will no longer be able to deal with the property subject to the floating charge during the currency of the administrative receivership.

As the floating charge must be over the whole

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