CORPORATE
LEGAL
Specialists in corporate insolvency.
Receivers
Introduction
The onset of economic recession of 2008 resulted in a dramatic increase in the number of receiverships in Ireland, both over residential and commercial property. But the reality is that receiver had been around long before that. They are integral to the process of charging and mortgaging on which banks rely in enforcing their security. One of the consequences of the recession was to highlight that receivership is not always a straightforward process. Receivers have wide-ranging powers constrained by an increasing number of responsibilities.
Legal Advice
In a company law context, the appointment of a receiver is a common way of enforcing a security. Sometimes receivers are appointed to sell a property, while other times they are appointed to manage the business in order to increase profitability and, in turn, the mortgagee's return. The wider the receiver's mandate, the more likely he is to require legal advice. A common example of this is where a company challenges the appointment of the receiver owing to, for example, some defect in the appointment process. Alternatively, the company may challenge the powers of the receiver to do certain acts or enter into certain transactions on its behalf. On other occasions, the company's other creditors or liquidator (if the company is in liquidation) may challenge the receiver's authority. A receiver in those cases must be careful not to do anything which may be beyond his powers. He could find himself personally liable for doing acts which he was not entitled to do. This is one example of a situation where receivers will require legal advice, usually involving a net question such as "Can I sell property X in accordance with the terms of the mortgage?"
We regularly provide specialist legal advice to receivers of commercial property. These are normally accountants who may already have a solicitor on board; however, the specialist nature of the advice may require a formal Opinion from a barrister. However, accountants may also engage Counsel directly without the need to instruct a solicitor. Please feel free to contact us and we will be happy to help.
Legal representation
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 possible 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 mae. For example, it is common for receivers to bring injunction proceedings to restrain a mortgagor from obstructing the receivership (for example, an occupant of a property who refuses to vacate so that the property may be sold). Occasionally, a receiver may find himself having to defend legal proceedings, for example where he is accused of breaching his duties. We can provide specialist advice and representation in these cases.
The following is a non-exhaustive list of the situations in which we can provid legal advice to receivers.
- Applications for clarification on any aspect of the receivership, including his powers, duties and the validity of his appointment.
- Applications by receivers injuncting parties from obstructing the receivership.
- Defending receivers in proceedings against him for breach of duties, including his duty to obtain the best price reasonably obtainable for the property.
- Representing receiver in application brought by liquidator o creditor of the company to fix receiver's remuneration (section 444 of the Companies Act 2014).
- Defending receiver in proceedings brought against him by Director of Corporate Enforcement or any other person.