Question

In: Accounting

Because a Receiver is appointed by a creditor, the Receiver must act in the best interests...

Because a Receiver is appointed by a creditor, the Receiver must act in the best interests of that creditor, not the company. Do you agree with this statement? Explain why or why not. You must refer to law.

Solutions

Expert Solution

Yes I strongly agree with the statement

Once a receiver has been appointed, they will act in the best interests of the creditor (the bank) to bring back the money it is owed. If more than one creditor holds a charge against the company, repayment priority will be dictated by the level of the securities.

It may be that the receiver believes the best result for the creditors will be achieved by allowing the business to continue to trade, or by facilitating the sale of the business to recover the full debt owed. Ultimately, it is the receiver who will decide the fate of the business, and advice from the company directors may not be sought.

The receiver must also investigate the conduct of the company directors to ensure they have acted within the regulations governing receivership, before reporting their findings to the Department for Business, Enterprise and Regulatory Reform (DBERR).

Rights of reciever

The ability to collect any rental income from a property the ability to keep the property insured

Power to take possession of a property

The power to put a property up for sale

The power to grant or surrender leases

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