Administrative Receivers - The importance of the date 15 September 2003
Index to Administrative Receivership legal topics - & When is it possible for an Administrative Receiver to be appointed
An administrative receiver can only be appointed by a floating charge debenture holder who registered its charge at Companies House prior to the 15 September 2003.
By way of explanation quite often a banker (or other person or organisation) takes out a written agreement with a company when they lend money to that company so as to obtain the security of a floating charge debenture.
That agreement is sometimes called a "debenture" and other times a "fixed and floating charge". The floating charge document has to filed (registered) at Companies House within 21 days of creation for it to be valid.
Under the floating charge it had always been possible for the floating charge holder to appoint an administrative receiver, in specified circumstances.
The administrative receiver so appointed acted only for the bank and his aim was to recover the monies due to the bank. The administrative receiver had very little in the way of duties to other creditors.
The 15th September 2003 is a cut off date as to whether or not a bank or other floating charge holder can appoint an administrative receiver.
The rules provided by the Enterprise Act 2002 (and now incorporated into The Insolvency Act 1986) are that:
- If the debenture was registered prior to the 15th September 2003 the bank may appoint their own administrative receiver.
- For debentures registered after the 15th September 2003 the banks power to appoint an administrative receiver is removed. (Banks holding post 15th September 2003 debentures will therefore resort to appointing "administrators" as opposed to "administrative receivers" when they see their security to be at risk.)
The main distinction between an administrator and an administrative receiver is that an administrator by law acts on behalf of the general body of creditors - not just the bank!
For more information about Administrative Receivers consult the index to administrative receivership topics on the left hand side of this web page.