Receivership—an introductory guide
Receivership—an introductory guide

The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:

  • Receivership—an introductory guide
  • Law of Property Act (LPA)/fixed charge receiver
  • Court-appointed receiver
  • Administrative receiver
  • Comparison table

The appointment of a receiver is a remedy for creditors and certain third parties to protect their interest in assets of a company. The creditor will typically be a chargeholder—that is, holder of security taken over property which must be registered to be effective.

This guide gives an introduction to the types of receiverships available and some of the effects of appointing a receiver. For links to the materials available in the Receivership subtopic, see: Receiverships—overview.

The following points are common to all forms of receivership:

  1. a company need not be insolvent to be placed in receivership

  2. the appointment of a receiver does not prevent other creditors from taking action against the company

  3. the company’s ability to deal with the property subject to the receiver’s appointment will be restricted during the course of the receivership

  4. following receivership, a company need not necessarily be liquidated (its affairs brought to an end). However, in practice, it often will be

Points specific to the various forms of receivership are set out below.

Law of Property Act (LPA)/fixed charge receiver

The Law of Property Act 1925 (LPA 1925) enables a mortgagee of a legal mortgage to appoint an LPA receiver:

  1. when the mortgage moneys become due, and

  2. after making a demand for payment under the terms of the mortgage

This right may alternatively (and more usually will) arise