Receivership sources
Main articles: Receivership, English property law, and Mortgages in English law
For businesses where floating charges were created before 2003, and in eight types of corporate insolvencies in the Insolvency Act 1986, sections 72B to 72GA, an older procedure of administrative receivership remains available. These companies are capital market investments; public-private partnerships with step in rights; utility projects; urban regeneration projects; large project finance with step in rights;[121] financial market, system and collateral security charges; registered social landlords; and rail and water companies. Until the Enterprise Act 2002, creditors who had contracted for a security interest over a whole company could appoint their own representative to seize and take a company's assets, owing minimal duties to other creditors. Initially this was a right based purely in the common law of property. The Law of Property Act 1925 gave the holder of any mortgage an incidental power to sell the secured property once the power became exercisable. The receiver was appointable and removable only by, and solely the agent of, the mortgagee.[122] In companies, secured lenders who had taken a floating charge over all the assets of a company also contracted for the right upon insolvency to manage the business: the appointed person was called a "receiver and manager" or an "administrative receiver".[123] The Insolvency Act 1986 amended the law so as to codify and raise the administrative receiver's duties. All receivers had a duty to keep and show accounts,[124] and administrative receivers had to keep unsecured creditors informed, and file a report at Companies House.[125] By default, he would be personally liable for contracts that he adopted while he ran the business.[126] For employment contracts he could not contract liability if he kept employees working for over 14 days.[127] However, the administrative receiver could always be reimbursed for these costs out of the company's assets,[128] and he would have virtually absolute management powers to control the company in the sole interest of the floating charge holder.
[read more..]
Main articles: Receivership, English property law, and Mortgages in English law
For businesses where floating charges were created before 2003, and in eight types of corporate insolvencies in the Insolvency Act 1986, sections 72B to 72GA, an older procedure of administrative receivership remains available. These companies are capital market investments; public-private partnerships with step in rights; utility projects; urban regeneration projects; large project finance with step in rights;[121] financial market, system and collateral security charges; registered social landlords; and rail and water companies. Until the Enterprise Act 2002, creditors who had contracted for a security interest over a whole company could appoint their own representative to seize and take a company's assets, owing minimal duties to other creditors. Initially this was a right based purely in the common law of property. The Law of Property Act 1925 gave the holder of any mortgage an incidental power to sell the secured property once the power became exercisable. The receiver was appointable and removable only by, and solely the agent of, the mortgagee.[122] In companies, secured lenders who had taken a floating charge over all the assets of a company also contracted for the right upon insolvency to manage the business: the appointed person was called a "receiver and manager" or an "administrative receiver".[123] The Insolvency Act 1986 amended the law so as to codify and raise the administrative receiver's duties. All receivers had a duty to keep and show accounts,[124] and administrative receivers had to keep unsecured creditors informed, and file a report at Companies House.[125] By default, he would be personally liable for contracts that he adopted while he ran the business.[126] For employment contracts he could not contract liability if he kept employees working for over 14 days.[127] However, the administrative receiver could always be reimbursed for these costs out of the company's assets,[128] and he would have virtually absolute management powers to control the company in the sole interest of the floating charge holder.
