When a company goes into receivership, an administrative receiver is appointed to run the company. An administrative receivership is appointed by a secured creditor who has a floating charge:
- over the whole; or
- substantially the whole of a company’s assets.
When a charge holder puts a company into receivership, the company does not have to be insolvent. The administrative receiver’s role is to run the company, with a view to:
- selling the company as a going concern; or
- to sell its assets,
The profits from the receivership are then used to repay the secured creditor. Under the Enterprise Act 2002, the procedure was effectively abolished, but any creditor holding a floating charge created before 15 September 2003 can still appoint an administrative receiver to enforce its security.
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