Receivership is a form of administration that has largely developed historically through case law until its processes became formalised under the Corporations Act. Receivers can also be appointed under other legislation though, including being appointed by the Court. The majority though are the private appointments of a receiver by a security holder with the terms of the appointment arising under the security contract. The terms of that contract may limit the receivership to particular assets and so it is not uncommon to see receivers acting in relation to the Company that is also the subject of an insolvency administration such as a Deed of Company Arrangement or liquidation.
The appointment of a receiver can be sudden and have wide ranging effects on the operations of the Company. It is therefore important to obtain proper advice in relation to any correspondence with a lender or other person empowered to appoint a receiver to ensure that the process is properly managed and, if possible, avoided.
In many cases, the proper response to a security holder may result in a Company being able to control its own affairs and resolve any issue without the cost or damage caused by the appointment of a receiver. Access is experienced in conducting such negotiations and communicating with security holders in order to provide an appropriate level of comfort.