CORPORATE INSOLVENCY

Corporate Receivership

In these circumstances one of the Kazar Slaven partners is appointed as Receiver by a secured creditor or by the court on the application of a person who seeks to protect their interests. The most common form of private appointment of a receiver occurs where a secured creditor holds a fixed and floating charge over the assets of a company.

When appointed, a receiver’s role will be to administer the property subject to the charge and to realise it for the benefit of the party entitled to it, usually the secured creditor.

The receiver’s primary duty is to the secured creditor however the receiver also has a duty to unsecured creditors not to sell charged property for less than its market value.

The proceeds from the realisation of assets must be distributed in accordance with the law. The proceeds of fixed charge assets are paid to the secured creditor after the costs and fees of the receiver in collecting have been paid.

The floating charge assets proceeds are distributed firstly in payment of the receiver’s costs and fees in collecting those assets, secondly for certain priority claims including employee entitlements and then in repayment of the secured creditor’s debt. Any surplus monies are then returned to the company or an alternate external administrator, such as a liquidator, if one has been appointed.

The receivership ends when the secured creditor’s debt has been repaid or all assets subject to the charge are realised.

For further information please see the Australian Securities and Investments Commission (ASIC) website.

For further information for employees please see the General Employee Entitlements and Redundancy Scheme (GEERS) website.