Administrative Receivership

The administrative receivership procedure is becoming less common following the Enterprise Act 2002 in September 2003 which imposed restrictions on the ability of floating charges to make such appointments.

Appointments of administrative receivers can only be made by holders of floating charges over the company’s assets (usually a bank) but more often than not with the consent of the company’s directors.

Consequently, an administrative receiver (‘AR’) acts on behalf of the floating charge creditor, where his duty of care lays.  The AR therefore has a primary objective of maximising the value of assets subject to the floating charge and his duty is not to deal with other creditor claims.

This procedure is not court driven.  The AR acts as agent of the company and the appointed IP has the power to trade the on the business of the company with a view to the sale of the assets under his control.