Administrative Receiverships:

Receivership v's Administration





Who can appoint an Administrator/Administrative Receiver?

A director, company or qualifying floating charge holder out of court.

A creditor etc in court.

A holder of a floating charge over the company assets.


By filing documents in court or at a court hearing.

By request by the charge holder and written acceptance by the proposed.

Administrative Receiver.

Is the company protected from creditor action?

Protection from creditor action as soon as documents are filed in court.

No creditors can still petition to wind up the company.

Is creditor approval required?

A 50% majority of those creditors who vote are required to approve the proposals to achieve the purpose of the administration.

No creditor approval required.

What publicity is required?

Advertised in the London Gazette and local papers.

Documents filed at Companies House.

All company documents to state that the affairs of the company are managed by an Administrator.

Same as for Administration.

Role of the Administrator/Administrative Receiver?

An officer of the court who owes a duty to the court and to the general body of creditors.

Duties owed to the appointing charge holder only although has a duty to maximise realisations especially where directors have personal guarantees to bank.

The purpose

To achieve the purpose of the administration ie sale of the company, a better realisation than that which could be achieved in liquidation or payment of dividend to preferential or secured creditor.

To realise assets to pay the amount due to the appointing charge holder.

What are the powers of an Administrator/Administrative Receiver?

Wide ranging powers to do all that is necessary to achieve the purpose of the administration.

Wide ranging powers to realise the assets subject to the appointing chargeholder. AR unable to deal with other assets.

How is the Administrator/Administrative Receiver controlled?

The Administrator must report to creditors at regular intervals.

An Administrator can be removed by a meeting of creditors.

An Administrator must comply with court directions.

The Administrative Receiver must report to his/her appointor and also report to meeting of creditors on events leading to appointment, disposal of assets of company, amounts payable to secured and preferential creditors and amount likely to be available for other creditors.

What is the effect of the appointment on the company's Directors?

The powers of the director cease on appointment of an Administrator.

An Administrator has the power to appoint or remove a director.

The powers of the director in relation to the assets subject the appointor's charge cease. The director's powers over other assets remain.

An AR has no power to appoint or remove directors.

Does the Administrator/Administrative Receiver investigate the conduct of the directors?



How is the Administrator/Administrative Receiver paid?

The Administrator's fees are approved by creditors.

The Administrator receives payment from assets realised in the administration

The Administrative Receiver's fees are approved by the appointing charge holder.

The AR receives payment from assets realised subject to the appointor's charge.

How do creditors get paid?

Creditors are paid from assets realised in the Administration. An Administrator can pay a dividend to preferential creditors, and with the agreement of the court, to unsecured creditors.

The Administrative Receiver can only pay a dividend to preferential creditors. If there are surplus funds, the company must be placed into another insolvency procedure to enable a dividend distribution to creditors.

How long does the Administration/Administrative Receivership last?

The Administration is ended automatically after 12 months unless extended by consent of the creditors (upto 6 months) or by application to court.

The Receivership lasts as long as is necessary to enable the Administrative Receiver to deal with the assets subject to the appointor's charge.

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