SECURED CREDITORS LENDERS
From time to time we act on behalf of Second-Tier Lenders and Private Secured Lenders as Receivers and Managers of Property or over a Company, or as Voluntary Administrators of the Company.
Either type of appointment follows a default in the underlying loan between the Company and the Secured Lender.
A Secured Lender for the purposes of appointing a Voluntary Administrator, a Receiver/Receiver and Manager is one who holds a Charge or Security over all, or substantially all, of the borrower Company’s property and is entitled to enforce that Charge at the time of appointing.
A Voluntary Administration appointment by a Secured Lender may be warranted where there is an otherwise viable business/business model worth saving and potential for the Secured Lender to be refinanced or paid out by some other means through the Administration process.
A Receiver and Manager’s appointment by a Secured Lender would be warranted where there is an Asset to be managed and realised or Assets generally to be realised for the for the benefit of the Secured Lender.
A Secured Lender’s debt is secured to the extent there are sufficient Assets available to meet the debt. Any shortfall on the debt is classed as an Unsecured Claim.
A Secured Lender’s claim is entitled to be paid in priority to all Creditors from the realisation of the Secured Assets, except to the extent the Secured Assets are Floating Assets / Non-Circulating Assets such as Cash at Bank, Stock and Debtors, which must first be distributed towards the payment of any outstanding Employee Entitlements (in certain situations).
Often Receiverships are conducted concurrently with a Liquidation of the Company, where either one could precede the other. If you are a Secured Lender considering the appointment of a Receiver/Receiver and Manager, the timing of the appointment of the Receiver/Receiver and Manager is important in securing your priority position to all of the Secured Assets so as to maximise the return to you.