Receivers are an integral part of security enforcement. Their appointment and subsequent actions have drastic, often irreversible, consequences for banks and borrowers. Receivers may also face personal liability for their actions. It is therefore essential for a receiver who is in any doubt about his powers, duties or appointment to seek legal advice before proceeding with selling the mortgaged property, evicting a tenant or managing a business.
We regularly provide specialist legal advice to receivers of commercial and residential property, as well as receivers and managers. These are normally accountants who may already have retained a solicitor but the specialist nature of the advice may require a formal Opinion from a barrister. Accountants may also engage our Counsel directly without the need to instruct a solicitor. Please feel free to contact us and we will be happy to help.
In addition to advising receivers, we also provide legal advice to borrowers ظô personal and commercial ظô who's property has had a receiver appointed to it or which is in danger of going into receivership.
In the context of company law, most court applications by receivers are made under section 438 of the Companies Act 2014. That section allows certain persons, including the receiver, to apply to the High Court for directions concerning any aspect of the performance of the receiver's functions. The application can encompass a broad range of situations, including the question of whether the receiver is liable for acts/omissions while in charge of the company's property.
This is a relatively common application and we are pleased to be able to assist with it on behalf of receivers. However, it is not the only application which a receiver may make. For example, it is common for receivers to bring injunction proceedings to restrain a mortgagor from obstructing the receivership (such as where an occupant of a property who refuses to vacate so that the property may be sold). Occasionally, a receiver may find himself/herself having to defend legal proceedings, for example where he/she is accused of breaching his/her duties. We can provide specialist advice and representation in these cases.
The following is a non-exhaustive list of the situations in which we provide legal advice and representation to receivers.
Applications for clarification by the court on any aspect of the receivership, including the receiver's powers, duties and the validity of his/her appointment.
- Applications by receivers injuncting parties from obstructing the receivership.
- Defending receivers in proceedings against him/her for breach of duties, including the duty to obtain the best price reasonably obtainable for the property.
- Representing receivers in application brought by the liquidator or creditor of the mortgagor company to fix the receiver's remuneration (section 444 of the Companies Act 2014).
- Defending receivers in proceedings brought against them by the Director of Corporate Enforcement or any other person.