Part 8 – Receivers
4 Chapters – Sections 428 to 448
Part 8 Chapter Overview
Chapter 1 – Interpretation
Chapter 2 – Appointment of receivers
Chapter 3 – Powers and duties of receivers
Chapter 4 – Regulation of receivers and enforcement of their duties
Part 8 Summary
This section of the Act covers notifications and information regarding the appointment of receivers. It extends the powers and duties of receivers under law. It also legislates for the regulation of receivers and the enforcement of their duties.
What is new?
While the Act substantially re-enacts the current law, it also gives specific powers to receivers in addition to those given to them under the Court order appointing them. Currently their only real power under law is to collect rent, with little ability to realise value on an asset. Any other powers given to receivers have been from the contract/mortgage agreement which lists powers of the receiver in the case of default. This section of the Act should enable receivers to obtain significantly better returns for the appointer. The powers conferred by the Act, in addition to any powers conferred by the appointing instrument are as follows:
- to enter into possession and take control of property of the company in accordance with the terms of the order or instrument of appointment
- to lease, let on hire or dispose of property of the company
- to grant options over property of the company on such conditions as the receiver thinks fit
- to borrow money on the security of property of the company
- to insure property of the company
- to repair, renew or enlarge property of the company
- to convert property of the company into money
- to carry on any business of the company
- to take on lease or on hire, or to acquire, any property necessary or convenient in connection with the carrying on of a business of the company
- to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the company
- to draw, accept, make and endorse an Act of exchange or promissory note
- to use a seal of the company
- to engage or discharge employees on behalf of the company
- to appoint a solicitor, accountant or other professionally qualified person to assist the receiver
- to appoint an agent to do any business that the receiver is unable to do, or that it is unreasonable to expect the receiver to do, in person
- where a debt or liability is owed to the company, to prove the debt or liability in a bankruptcy, insolvency or winding up and, in connection therewith, to receive dividends and to assent to a proposal for a composition or a scheme of arrangement
- if the receiver was appointed under an instrument that created a charge on uncalled share capital of the company:
(a) to make a call in the name of the company for the payment of money unpaid on the company’s shares; or
(b) on giving a proper indemnity to a liquidator of the company, to make a call in the liquidator’s name for the payment of money unpaid on the company’s shares
- to enforce payment of any call that is due and unpaid, whether the calls were made by the receiver or otherwise
- to make or defend an application for the winding up of the company
- to refer to arbitration or mediation, any question affecting the company
What is different?
The Act consolidates existing legislation regarding receivers and extends their reporting obligations. They will now be required to report to the DPP and the ODCE where they believe an officer of the company concerned has committed an offence.
The Act provides that a report must be made to the ODCE if a professional body believes that a receiver has committed an offence under company law.
Under current law, a company must indicate that it is in receivership on its invoices, order forms, and business letters. The Act extends this requirement to emails and the company website.
What are the Key Points?
- New powers of receivers
- Reporting obligations of receivers
- Reporting obligations of professional bodies in relation to receivers
What do accountants need to do?
Ensure they are familiar with the notifications and information required to be given when a receiver is appointed. Be aware of the power and the duties of the receiver.
What do companies need to do?
Make sure they are in a position to provide the necessary information to a receiver should one be appointed.