The importance of accurately describing the role of a Receiver in a Deed of Appointment

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The importance of accurately describing the role of a Receiver in a Deed of Appointment

  • Posted by: Jim Stafford
  • Category: Business

I set out below a link to a recent High Court judgment that has possibly identified a critical flaw in some Receivership appointments.

When a bank/fund appoints a Receiver, it does so by a Deed of Appointment. The Deed needs to be precise and in accordance with the Charge documentation. In the case below, the borrower argued that the fund should have appointed the Insolvency Practitioner as a “Receiver and Manager”. However, the Deed showed that the Insolvency Practitioner was appointed as a “Receiver”, and not as a “Receiver & Manager”.

Certainly in corporate Receiverships, sometimes the banks/funds do not wish to appoint a “Receiver and Manager” if the only worthwhile asset is a freehold property. Appointing a “Receiver and Manager” to a corporate company could involve the Receiver having to deal with employees/creditors/retention of title  etc.

The decision was made at an interlocutory hearing. It will be interesting to see what happens at the full hearing.

http://www.courts.ie/Judgments.nsf/0/0F50D5551E5F18C4802582C1003361B7
Author: Jim Stafford