A receiver is appointed privately, but reports publicly. Sections 273 to 277 of the Companies Act 1997 are how the company, its creditors and the Registrar find out what is happening to the assets.
Section 273 — the first report
(a) particulars of the assets comprising the property in receivership;
(b) particulars of the debts and liabilities to be satisfied from it;
(c) the names and addresses of the creditors with an interest in it;
(d) particulars of any encumbrance over it held by any creditor, including the date on which it was created;
(e) particulars of any default by the company in making relevant information available;
(f) such other information as may be prescribed.
(a) the events leading up to the appointment, so far as the receiver is aware of them;
(b) property disposed of and any proposals for disposal;
(c) amounts owing, as at the date of appointment, to the person in whose interests the receiver was appointed;
(d) amounts owing, as at the date of appointment, to creditors having preferential claims;
(e) amounts likely to be available for payment to creditors other than those in (c) or (d).
A receiver may omit details of any proposals for disposal of the property in receivership if he considers that their inclusion would materially prejudice the exercise of his functions.
The exception is narrow. It covers proposals for disposal only — publishing a reserve price or a preferred bidder would obviously damage a sale process. It does not licence the omission of asset particulars, creditor details, encumbrances, or the amounts in paragraphs (c) to (e). Failure to comply is an offence, penalty under section 413(2).
“Amounts likely to be available for payment to creditors other than the appointor and the preferential creditors” is the receiver’s estimate of what, if anything, will reach ordinary unsecured creditors. In most receiverships the honest answer is nil — which tells an unsecured creditor whether it is worth pursuing the company, seeking a liquidation so that a liquidator can investigate, or writing the debt off.
Paragraph (d) of subsection (1) — the date each encumbrance was created — matters for the same reason. A charge created shortly before the appointment may be attackable in a later liquidation under sections 345 and 347.
Section 274 — the further reports
(a) the end of each period of six months after the appointment; and
(b) the date on which the receivership ends,
the receiver, or the person who was receiver at the end of the receivership, shall prepare a further report summarising the state of affairs with respect to the property in receivership as at those dates, and the conduct of the receivership, including all amounts received and paid, during the period to which the report relates.
(a) property disposed of since the previous report and any proposals for disposal;
(b) amounts owing, as at the date of the report, to the appointor;
(c) amounts owing, as at the date of the report, to preferential creditors;
(d) amounts likely to be available, as at the date of the report, for payment to other creditors.
The section 273(3) omission is repeated in section 274(3), but note its limit: it applies only to the six-monthly reports under paragraph (1)(a), not to the final report under paragraph (1)(b). By the end of the receivership there is no sale process left to prejudice, and full disclosure is required. Failure to comply is an offence under section 274(4).
Section 275 — extending the time
(a) the Court, where the person was appointed a receiver by the Court;
(b) the Registrar, where the person was appointed by or under a deed or agreement.
Most receivers are appointed under a debenture, so in practice the extension is an administrative application to the Registrar rather than a Court proceeding.
Section 276 — who is entitled to a report
(1) A copy of every report shall be sent to (a) the company, and (b) every person in whose interests the receiver was appointed.
(2) Where the receiver was appointed by the Court, a copy shall be filed in the office of the Court.
(3) Not later than 21 days after receiving a written request from (a) a creditor, director, or surety of the company, (b) any other person with an interest in any of the property in receivership, or (c) the authorised agent of any of them — and on payment of the reasonable costs of making and sending the copy — the person who prepared the report shall send a copy to the person requesting it.
(4) Within seven days after preparing a report, the person who prepared it shall submit a certified copy to the Registrar.
(5) Failure to comply is an offence, penalty under section 413(2).
Because of subsection (4), every report ends up on the public file at the Registrar. Anyone may inspect it under the ordinary public register arrangements.
Subsection (3) is the direct route, and its list is wide: a creditor (secured or unsecured), a director, a surety, or any person with an interest in the property — a lessor, a retention of title supplier, a junior chargeholder. The request must be in writing, and the cost is limited to the reasonable cost of copying and sending.
Directors are included for a practical reason: they remain in office, they remain exposed to section 348, and they need to know what the receiver is doing with the assets.
Section 277 — the duty to report breaches
A receiver who considers that the company or any person has —
(a) committed an offence in relation to the company; or
(b) been guilty of any negligence, default, breach of duty or trust in relation to the company,
shall as soon as practicable submit a written report of that fact to the Registrar, and give the Registrar such information or documents, and such assistance, including further reports, and access to and facilities for inspecting and taking copies of any documents, as the Registrar requires.
Failure to comply is an offence, penalty under section 413(2).
The trigger is what the receiver considers — not proof, not a finding. The subject matter covers any offence in relation to the company and any negligence, default, breach of duty or breach of trust — not only offences under this Act.
This is why section 256(1)(c) disqualifies anyone who has been a director of the company in the previous two years. A receiver must be able to report on the conduct of the people who ran the company, and cannot do so if they were one of them.
The equivalent obligation for a liquidator is in section 305, and the Registrar’s follow-up powers are in sections 400 to 407 — inspection of documents, requiring explanations, and examination of persons.
Sources
- Companies Act 1997 — ss 256, 273–277, 279, 305, 345, 347, 348, 400–407, 413
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.