What is administrative receivership?

What is administrative receivership?


What is administrative receivership?


When a company borrows money from a bank, they will usually be required to sign a debenture providing the bank with a charge over the freehold property and all other assets of the company, thus providing security for the loan.  If the company defaults on the terms of the loan, the bank can appoint an administrative receiver to ‘receive’ and liquidate (i.e. sell) the company assets in order to repay the loan.  They can do this regardless of whether the company is officially declared insolvent or not.

This process is called administrative receivership. Its purpose is to allow a creditor with security over a limited company’s property to recover its money. The administrative receiver must be a licensed insolvency practitioner, who will be primarily accountable to the charge holder that appointed them.

The administrative receiver will be able to seize and dispose of the company’s assets, either piece-by-piece, or by selling off the company’s business as a going concern (e.g. if it is a profitable trading business) in satisfaction of the debt owed.

The particular powers of the administrative receiver are set out in Part 3 of the Insolvency Act 1986 and under the Law of Property Act 1925.  Often the bank or other lender will want to extend the statutory powers of the insolvency practitioner in the security agreement with the borrowing company.


How does administrative receivership compare with other forms of company insolvency?


Many may not recognise the difference between receivership and liquidation of the company. Liquidators will act on behalf of a group of creditors collectively, whereas the administrative receiver will act in the interests of only the charge holder who appointed them.

It differs too from administration, in which an insolvency practitioner will again try to improve the position for all creditors, rather than only one and will at least consider rescuing the company if it proves possible.

In the case of all forced liquidations and all administrations, the insolvency practitioner is only appointed because the company is already insolvent. In the case of the appointment of an administrative receiver, it might just be a temporary cash-flow problem that has led to the default on the loan.

What are the consequences for a company?


Typically, if a company is in default on a loan, they are already in some financial difficulty. A receiver seizing and selling their assets will only make things worse, for both them and unsecured creditors, and in most cases will cause the company to cease operating.  If the tangible assets of a company are forcibly removed, a company may be left with supply and demand problems and significant staff redundancies.

This in turn can cause reputational damage for the company which will be difficult to recover from in full. That said, it may have its benefits.  Depending on how much is taken to satisfy the debt, a company may be able to continue operating, pay off its debtors and avoid bankruptcy and potential liability for the directors for wrongful trading. However, if not, then the control of the company will be returned to the directors, who may then need to make redundancies and shut the company down if it is no longer viable.

For further information on administrative receivership – whether it might help or hinder your business, and what alternatives may be available to you – please don’t hesitate to contact our commercial solicitor, David Cammack. Please call 07909 564799 or contact him by e-mail: [email protected]

For more information

Contact us on 01206 577676 or you can email [email protected]

To Register or Not to Register

To Register or Not to Register

According to HM Land Registry, as of September 2019 87% of land in England and Wales was registered.

But what about the other 13%?

If you have lived in your property since prior to 1990 and have not taken a mortgage in that time, it is possible that you may be in that 13%, which means that the Land Registry has no record of your property or the fact that you own it.

But do you have to register your property?

Property only needs to be registered when it is transferred, mortgage or inherited, but there are several benefits to registering your land voluntarily. Firstly, the Land Registry charges a reduced fee for processing voluntary first registrations. Secondly, it makes establishing that you are the owner of land far easier. Thirdly, it makes it easier for you to sell or mortgage your property later, and finally, it helps to make you less vulnerable to fraud.

But do I need a solicitor to register my land, or can I do it myself?

The Land Registry will accept applications directly from the owner of land, but it can be beneficial to instruct a solicitor to deal with this for you. Land Registration can be complex and time consuming, the Land Registry has strict requirements which can be difficult to understand. A solicitor will know exactly what is needed, which means that it is less likely that the Land Registry will raise a query or reject the application. Another benefit to instructing a solicitor is that solicitors do not need to send the original deeds to the Land Registry, risking them getting lost or damaged in the post. The Land Registry will accept certified copies of the documents from a solicitor, provided the solicitor is holding the original documents.

But what if I cannot find my deeds? Does this mean my land can’t be registered?

If you cannot locate your deeds, it is best to speak to a solicitor about the next steps. It is possible to register land without the original deeds in some cases and a solicitor may be able to help you.

If you would like help to register your land, we would be more than happy to assist you. Our Conveyancing Team are available for appointments so please do give us a call on 01206 577676. Any email enquiries can be sent to [email protected]

For more information

Contact us on 01206 577676 or you can email [email protected]