A receivership is where a secured creditor appoints a third party Receiver to assume control of the assets that are subject to a security agreement. A Receiver acts in this role with the power contained within the security agreement and instrument appointing the Receiver.
Jonathan McLeod has worked in the capacity of Receiver and Receiver and Manager many times to the satisfaction of his clients. Generally, his two functions are to realise the secured assets over which the Receiver is appointed and working under the priorities set out in the Corporations Act 2001 (Cth) distribute the funds recovered.
Once the Receiver’s costs have been paid, the distribution of funds generally follows accordingly:
- When funds are recovered from circulating assets i.e. cash, debtors and inventory, firstly, certain priority employee entitlements are paid and secondly amounts owed to secured creditors are paid;
- When funds are recovered from the sale of non circulating assets i.e. land, real estate, equipment or vehicles, amounts owed to secured creditors are paid
Should there be any surplus from the Receivership, it will be available to be paid to the company or a liquidator of the company if one has been appointed.
During the receivership, directors still have the same duties, along with additional requirements to provide the Receiver with a Report as to Affairs for the company, provide all of the company’s records and to reasonably assist in the process when required.
The receivership is concluded when sufficient funds have been realised to pay the secured creditor in full or all assets that are subject to the receiver’s appointment are realised. Similarly, the receivership can end if the Receiver resigns from his/her appointment. When the receivership is concluded, the directors are reinstated unless a liquidator or administrator has been appointed.
As an experienced practitioner in receiverships, Jonathan McLeod is here to provide trusted help and advice. For more information please contact Jonatan McLeod and Partners on (07) 3004 0800.