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Receivership
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Madison Financial - Receivership
"What does appointing a receiver mean"?
When a company has borrowed money from a bank on an overdraft or loan, it will usually give a debenture as "security" for the loan. It's a bit like a mortgage on your house. This debenture gives powers to the bank if the business cannot repay that money or breaks the lending terms.
If the company runs into financial difficulty then the bank can call the money in or "foreclose". This is a common fear for directors and many people worry that banks want to appoint a receiver when things go wrong. Actually, this is far from accurate for two reasons:
When a company has borrowed money from a bank on an overdraft or loan, it will usually give a debenture as "security" for the loan. It's a bit like a mortgage on your house. This debenture gives powers to the bank if the business cannot repay that money or breaks the lending terms.
If the company runs into financial difficulty then the bank can call the money in or "foreclose". This is a common fear for directors and many people worry that banks want to appoint a receiver when things go wrong. Actually, this is far from accurate for two reasons:
Most banks CANNOT appoint receivers! If their debenture was created after 15th September 2003 the bank has no power to appoint receivers.
Banks don't want to appoint receivers! If the banks debenture is older than 15th September 2003 the bank may appoint, but actually won't want tounless under very difficult circumstances.
Got questions? What are Company Voluntary Arrangements (CVAs)? What does going into a Company Voluntary Arrangement mean? How do you start a Company Voluntary Arrangement? Call Madison Financial and speak to one of our experienced debt experts on 0161 713 1883
Don′t
Bury your head to the problems - reading this website is a good start!
Guess, say financial figures don’t matter, spend lots of time building detailed accounts - they are history.
Blame everybody else.
Ignore legal paperwork.
Prioritise creditor issues incorrectly.
Make promises to creditors that you cannot possibly keep. Remember while you may expect to be able to pay PAYE back over time you willhave to pay ongoing debts and probably cash will not come in as fast as you think.
Hide the issues from your people - they are the business, not just you.
Talk to lots of people and procrastinate.
Keep changing plans.
Lie to the bank.
Ignore closure as a real possibility.
Be unrealistic.
For more information on Company Voluntary Arrangement (CVAs) Call Madison Financial and speak to one of our experienced debt experts on
0161 713 1883
