Enforcement—receivables
Enforcement—receivables

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Enforcement—receivables
  • Useful materials on enforcement
  • Forms of security over receivables
  • Enforcement options—assignments and charges over receivables
  • General considerations on enforcement
  • Enforcement—sale of receivables
  • Enforcement—collection of receivables
  • Future developments

The term receivables is often used to refer to book debts, although strictly speaking book debts is a narrower term because it refers to 'debts accruing in the ordinary course of... trade as are usually entered in the trade-books' of a company. A receivable has a wider meaning than ‘book debt’ and would include:

  1. book debts

  2. the right to receive a payment under a loan agreement

  3. rights to payments under contracts; and

  4. rights to refunds of tax

All other liquidated monetary claims of the security provider would be encompassed by the term ‘receivable’.

Often much of the value comprising a security package is to be found in the receivables due to the security provider. How best to realise the value in the receivables will form a key part of any enforcement strategy.

Collection by any receiver or administrator appointed is a common option.

Where there is a large portfolio of debts that may take considerable time to collect specialised collection agents may be used by the security holder or its delegate. A less common option is for the portfolio of receivables to be sold to a third party. The practical aspects of collection and sale are dealt with below.

This Practice Note discusses:

  1. enforcement options for security holders who want to enforce security over receivables

  2. some general issues potentially giving rise to problems for the security