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When the debt of a secured creditor is in default they may opt to exercise their security and appoint someone to take control of the asset/s and realise same – these appointments are known as Secured Appointments.


The role of both a Receiver & Manager and a Controller falls under the Corporations Act, 2001 and involves the appointment of a financier/individual to take over assets of a company – generally this is to obtain a return for an unpaid secured creditor.  A Controller is usually appointed over a particular secured asset (eg., motor vehicle, equipment lease, etc) and is often the bank themselves, whereas, a Receiver & Manager is appointed over the entire assets of a company – a Receiver can also be appointed by the Controller as their agent.


Note – a Receiver & Manager must be a registered liquidator, ie., a person registered by the Australian Securities and Investment Commission (ASIC) and under Section 1282(2) of the Corporations Act. 



Related Links

Corporations Act 2001



Frequently Asked Questions About Receiverships



Who appoints a Receiver? 

A secured creditor will appoint a Receiver to a company when the payments due from the debtor are in default – the creditor has the right to do this under their security and use this method to assist in getting their money back.



Who can act as a Receiver?

A Receiver appointed by a secured creditor must be a registered liquidator, registered by the Australian Securities and Investment Commission, and a Court Appointed Receiver must be an official liquidator and registered through the Supreme Court.



What can a Receiver do?

* Collect and realise the assets that are covered under the security and the appointment;

* Pay any employee entitlements that have priority under the Corporations Act, if applicable; and

* Pay monies across to the secured creditor

* Reports to the secured creditor that appointed them


What must the Director do?

When a Receiver is appointed to a company the director is obligated to:


* Complete a Report as to Affairs (RATA) and supply this to the Receiver

* Collate all books and records, relevant to the secured creditors position, and hand these over to the Receiver

* Be available to respond to any question and/or queries of the Receiver – as and when required



Who pays the Receiver/Controller?

The secured creditor pays these fees – however, the security documentation will usually allow the secured creditor to recover any costs incurred from the assets under the charge.



What happens to the Creditors?

The Receiver/Controller will not usually contact the creditors as they represents the secured creditor.



How is the company affected?

The Receiver is appointed to control the asset/s that a secure creditor has a charge over – this means that:


* Directors remain in place and can continue to operate any assets that are not subject to the control of the Receiver

* Directors retain their obligations under the Corporations Act

* Other creditors are not affected by the Receivership – however, they may still apply to Court for an application to wind up the company (in some circumstances there may not be many assets left to take action against)

What is Receivership?



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