I remember James coming in to our London office for a meeting about a creditor who was threatening to appoint an administrative receiver unless James Company came up with £97,000 which was impossible as he explained. James was in the building and construction industry and had houses that were on sale but not selling. The £97,000 was owed to the bank and James was 3 months behind on his payments.
James wanted me to explain what an administrative receivership is and how it works. Let’s start with explaining what it is shall we, an administrative receivership is when an administrator is appointed normally by a creditor who has a fixed / floating charge over the assets of the company by way of a fixed / floating debenture registered at companies house over the assets of the same company.
Who is Administrator?
The Administrator is normally an Insolvency Practitioner who gets appointed as the Receiver by the creditor, this could be a finance house like the bank as in James case or other money lenders who in order to protect themselves have taken a registered charge over the company’s assets. The administrative receiver is appointed to liquidate whatever assets he or she sees fit to recoup the creditors funds and all costs associated with it, inc the administrators costs.
Time was not on James side as he was already 3 months behind on his repayment of the company loans, so we had to act quickly in order to save the company or find a solution to minimize his personal and business liabilities. After carefully examining the documents at companies house we found that James also had another business who had also lent money to this same company but James other company also had a debenture (a charge over the assets) the good point which we manage to pick up on was that James other company’s debenture was registered first before the banks charge.
Armed with this information we spoke with the bank’s lending and legal team and explained James other company could if needed to appoint an administrative receiver which would super seed the banks charge and this could leave the bank in the cold. To cut the story short the agreed to give James another 6 months to pay the loan off subject to the first property being sold.
So if you are being threatened by a creditor with an administrative receivership seek the advice of an experienced insolvency auditor like myself and seek his advice to provide you with other options to minimize your liabilities without going down the rout of administrative receivership.
Call our FREE Insolvency Helpline on 0800 24 0800