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There are different types of "receiver".
For the purposes of this section of the website when the word
"receiver" is used we mean "administrative
receiver".
Receivers can be appointed by any party
who holds a "debenture" over a company. The debenture
document must, however, grant the right to appoint a receiver.
As a result of the Enterprise Act 2002
however, the power to appoint a receiver is only available
to debenture holders who created their charges prior to the
15th September 2003.
A debenture is nothing special. In essence
it is a written agreement between a lender and a borrower.
The written documentation is sometimes called a:
- debenture or
- fixed charge and/or
- floating charge or
- security document.
There are rules as to what conditions
must exist for a debenture to be "valid". A debenture
can be held by any of the following parties:
- a lending bank
- a director who has lent money
to his company
- a supplier who has supplied
goods or services to a company
- any other party who has lent
money to the company.
Generally speaking the paper document
(called a debenture) usually sets out circumstances when a
receiver may be appointed by the lender who holds that debenture.
The holder of a debenture has substantial
rights and powers.
- the right of a certain priority
of repayment over other creditors who do not hold debentures.
- the power to appoint a receiver
to enforce those repayment rights.
You can determine who holds a debenture
over a particular limited company by undertaking a search
of the "register of charges" for that company at
Companies House.
It is only those charges created pre
15th September 2003 that can entitle the holder of a debenture
to appoint an administrative receiver.
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