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A typical receivership results from a creditor who has a security interest over a business appointing a receiver to enforce it. The powers of such a receiver are derived concurrently from the security agreement and Corporations Law and they are usually very wide. The powers of a receiver appointed merely to sell a particular asset would be narrower. Holistic and detailed advice from a Bankruptcy and Insolvency Lawyer regarding Receiverships can be greatly beneficial if you are acting as a receiver or if you are dealing with one.

Under the Corporation Law a receiver, whether appointed by the court or by a secured creditor, has a wide range of powers unless they are excluded or modified by the order of the court making the appointment or the security agreement. Such powers of a receiver will usually include power to manage the company's business and to carry on trading. The creditor will decide whether the company's assets should be sold or whether its business should be carried on. However, the company may confer powers on the receiver only to an extent consistent with the Corporations Law. It cannot authorise the receiver to do anything which it is unable to do itself as this would be ultra vires. Obtaining holistic legal advice from a qualified Bankruptcy and Insolvency Lawyer can be greatly informative and useful in understanding the role of a receiver.

The powers by Law may include all things necessary or convenient to be done for the attainment of the objectives for which the receiver was appointed. The power conferred by Corporations Law has been held sufficient to authorise the receiver of a responsible entity to cause the responsible entity to exercise its statutory power under to make and maintain an application to wind up the schemes for which it is responsible. Furthermore, the powers conferred by the Corporations Act include the power to carry on any business of the corporation; to dispose of property of the corporation; to convert property of the corporation into money; to borrow on security; to execute documents; to bring or defend proceedings in the name of the corporation; to use the corporation's seal; to engage or discharge employees on behalf of the corporation; and to appoint an agent. There is also a power to lease or let on hire property of the corporation, and a power to take on lease or hire any property necessary or convenient in connection with the carrying on of the business of the corporation. In some receiverships the receiver may need to carry on the company's business rather than just sell the secured assets. Also, a receiver has powers to gather information, seek directions from the court and receive compensation. Professional legal advice by a Bankruptcy and Insolvency Lawyer may be advantageous if you are acting as a Receiver or need to deal with a Receivership and need to adequately understand their powers and duties.

In dealing with secured property in the course of enforcing a security interest, a Receiver has certain duties which include the requirement to use the powers of enforcement in good faith and for the purpose for which they were conferred. In enforcing a security interest a receiver is subject to the same requirement as to proper use of powers of enforcement as that imposed on an enforcing mortgagee. The fiduciary duties forbids self dealing, any actions in self interest and to exercise reasonable care and due diligence in the performance of their duties. Obtaining proper legal advice from a qualified and experienced Bankruptcy and Insolvency Lawyer can significantly assist in understanding these duties and obligations.

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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