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A Receiver or Manager:

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There are times when a receiver is appointed by the court or under an instrument not merely as a "receiver" but as a "receiver and manager". The only real difference between a receiver and a receiver and manager lies in the extent of their powers. Under General Law it is when the appointee, whether court-appointed or appointed under instrument, is given a power to manage the business of the company that the appointee is called a "receiver and manager". A receiver and manager, who is really a receiver with extended power, is to be distinguished from a person called a "manager" who may be appointed by a secured party to act for the secured party when the secured party itself takes possession of the secured property, either because it has the legal title or the security agreement gives power to take possession. Having professional legal and financial advice from an experienced Bankruptcy and Insolvency professionals may be of great benefit in this regard.

There are two main ways in which a Receiver or manager may be appointed which is either privately or by a court. Pursuant to a security agreement, for example, a loan agreement, mortgage, debenture or charge which stipulates what if a default occurs then a Receiver and Manager may be appointed. They may also be appointed by order of the court upon the application of a creditor. Only ASIC registered liquidators may be appointed. Once appointed, the role of a receiver or manager appointed by a creditor is to administer the assets of a company with a view to preserving them for the benefit of that creditor rather than the creditors generally. The powers of a receiver or manager will be found in the terms of the security deed, the Corporations Act, or the court order under which they were appointed. Strictly speaking the role of a receiver is to collect and sell the company's assets and apply the proceeds, whereas a manager is entitled to run the business of the company. Whether a party is appointed as a receiver, or as a receiver and manager, depends on the terms of their appointment. Comprehensive and sound advice from a Bankruptcy and Insolvency Lawyer regarding Receivers and Managers can be greatly beneficial in understanding the implications of an appointment.

The office of a Receiver and Manager is quite a unique position with rights, duties and obligations which are complex and detailed. Most security agreements which authorise the secured party to appoint a receiver provide that the receiver shall be an agent of the company but that the receiver may exercise powers without the consent of the company. The validity of the delegation may depend on the power of the company's board under the company's constitution to delegate power to act for the company and if the company is a trustee, whether it has power to delegate as a trustee. The statement that the receiver is the agent of the company is incorrect because the receiver is appointed by the secured party and the receiver is concerned not for the benefit of the company but for the benefit of the secured party. The powers conferred on the receiver are really ancillary to the main purpose of the appointment, which is the realisation of the security. Professional legal advice by a Bankruptcy and Insolvency Lawyer may be advantageous if you are acting in this capacity or are dealing with a Receiver or Manager.

If you would like further information or wish to discuss your receivership matter with an experienced Bankruptcy and Insolvency Lawyer please do not hesitate to contact us by telephone on (02) 9233 4048 or by email to info@navado.com.au

 

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