Receiverships Boom as Economy Slumps

According to a recent report, company receiverships (where a bank appoints a receiver to run a company in order to protect the banks position) are up by more than 150 per cent this quarter compared with the same quarter last year.

The result indicates that banks are taking a much tougher and proactive approach to companies that get into financial trouble.

Receiverships are normally ‘hostile’ appointments. They are made by lenders and the purpose of a receivership is to sell company assets so that the loan can be repaid. In consequence, a company entering receivership normally has a slim chance of emerging as a profitable entity afterwards or finding a buyer. This contrasts with administration, where the object is to give the company protection from creditors while it is being turned around or sold as a going concern.

If your company is experiencing financial problems, take professional advice as soon as possible.

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