Recievership Flashcards
(25 cards)
What is receivership?
A remedy for secured creditors allowing them to appoint a receiver to take control of and realise charged assets.
Under which legislation is receivership governed in Ireland?
Primarily under Part 10 of the Companies Act 2014 (CA 2014).
Who can appoint a receiver?
Privately, by a secured creditor under a debenture (s.433 CA 2014), or by the court, if assets are in jeopardy (s.434 CA 2014).
What must be true for a valid appointment of a receiver?
Strict compliance with the debenture terms, receiver must be qualified (not an undischarged bankrupt or officer), must notify CRO and CEA.
What happens when a receiver is appointed under a floating charge?
The floating charge crystallises, becoming a fixed charge over the relevant assets.
What are the statutory powers of a receiver under s.437 CA 2014?
Take possession of property, sell or lease assets, manage the business, borrow on security, commence or defend proceedings, appoint agents.
Can a receiver apply to the court for directions?
Yes – under s.438 CA 2014.
To whom does a receiver owe their primary duty?
To the debenture holder who appointed them.
What is the receiver’s duty to the company and guarantors under s.439 CA 2014?
To exercise all reasonable care to obtain the best price reasonably obtainable for the assets.
What case confirmed the duty to get the best price (not best value)?
Re Bula Ltd [2002] 2 ILRM 513
What are the key principles from Re Edenfell Holdings?
Duty applies to the company and guarantors, no duty to unsecured creditors, no requirement to wait for market improvements, remedy for breach is monetary compensation.
Why does a receiver owe duties to guarantors?
Because poor asset realisation increases the guarantor’s liability.
What cases support the duty to guarantors?
McGowan v Gannon (1983), American Express v Hurley (1986)
Is a receiver personally liable on contracts they enter?
Yes, unless expressly excluded (s.438(4) CA 2014).
Are receivers liable for pre-appointment contracts?
No – as confirmed in Ardmore Studios v Lynch (1965).
Who must be paid from floating charge proceeds before secured creditors?
Preferential creditors, under s.440 CA 2014.
Is a receiver liable for mismanagement of the company?
Generally, no, if they act in good faith.
What case limited management liability to bad faith only?
Moorview Developments v First Active plc [2009]
Can receivers sell assets below market value?
Yes, provided they obtain the best price reasonably obtainable at the time (Re Bula).
Can a receiver sell to a related party?
Only with notice to the court or interested parties (s.439(3)).
Must a receiver honour a sale once agreed, even if a better offer appears?
Yes – see Casey v Irish International Bank.
What must a receiver file after appointment?
Notice with CRO (s.429–430), Statement of Affairs within 14 days, Reports to CEA and affected creditors (s.446).
How can a receiver be removed?
By the court (s.435), contractually, under the debenture, by an examiner if appointed within 3 days.
How is a receiver’s remuneration determined?
By agreement, or by the court if no agreement exists.
