Lecture notes

 examinership - more infrequent

 Receivership:
 policy - company individuals rights; now more updated procedure occurs

📎 Where a company defaults on a financial obligation secured by a debenture that creates

legal mortgage or charge over land it is open to the secured creditor to seek possession of the
property (either voluntarily or by court order) and then to sell the property (either with or
without the help of court). More often than not, however, a secured creditor whose debenture
so allows will seek to appoint a receiver: the appointment of a receiver is one of the most
popular remedies availed of by secured creditors against defaulting companies.

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Who is a receiver?

 Person appointed on behalf of a secured creditor to sell company assets which has
been mortgaged or charged in favour of that creditor

In the case of a court-appointed receiver, the receiver is appointed by order of the court to
gather up and take into his possession the assets of another.

In the case of a receiver appointed on foot of a deed (eg a debenture) the purpose is the same:
the receiver is appointed by the creditor to gather up and take into his possession the debtor’s
assets for the purpose of selling them and applying the proceeds in satisfaction of the sums
due to the creditor.

 Receivers have power to sell the charged asset for best possible price under section
439 of 2014 Act
 Receiver-managers have power to carry on business of company with view to using
proceeds to discharge debt owed – usually where charge is over the whole of the
company’s assets ́
 Appointed under terms of loan agreement/debenture (more frequently) or can apply
to High Court to appoint
 Appointment prevents the directors from making any decisions regarding the charged
asset without the receiver’s consent (assets are restricted)
 the aim of receivership - to end the relationship between the creditors and the
company. A receiver, appointed on foot of a debenture, has the principal task of
securing the assets of a company which have been mortgaged or charged in favour of
the debenture holder which appointed him.
o A company which is ‘in receivership’ has had a receiver appointed, who is
realising and receiving its assets and, or in the alternative, managing its affairs
in the hope that the debts outstanding to the debenture holder which appointed
him can be met.
 examinership - it’s about long relationship, ask for compromise; that is about the
difference in policies.
  a liquidator has the task of winding up a company, realising its assets and distributing
those assets in accordance with law

Somebody arranges the sell of company assets, they’re not concerned with employee, only
care about secured creditors; receiver vs receiver manager - have more to say about company
business, how it’s run;

Types of persons

Following the enactment of the Companies Act 2014, it remains the case that the only
qualifications that law requires of receivers are negative, ie certain persons are barred from
becoming receivers. In the first place, a body corporate is not qualified for appointment as
receiver to the property of a company.

 Section 433(1) of 2014 Act:

Following are disqualified from acting as receiver:

 Bodies corporate
 Un-discharged bankrupts
 Persons who have been an officer or employee of the company within 12
months of commencement of receivership
 Connected persons – civil partners/spouses/parents/brothers/children of
officers of company or partner of, or in employment of an officer or employee
of the company
 Persons disqualified for above reasons for appointment over subsidiary
company

Appointment and Removal

 Appointment
o Appointment on foot of a debenture
 In Re Belohn; The Merrow Ltd v Bank of Scotland and another
Gilligan J extensively reviewed the authorities relating to the
appointment of receivers pursuant to a debenture and concluded that ‘it
is clear from the foregoing that a receiver who is not appointed in
accordance with the terms of the debenture is not validly appointed. In
addition, an invalidly appointed receiver may be a trespasser on
company property.’
 The distinction between a receiver simpliciter and a receiver manager
is important, and the appointment of either will be dependent upon the
nature of the debenture under which the receiver was appointed

👉🏼 where the primary property mortgaged or charged is a specific asset,

or series of assets, the appropriate appointment is of a simple
‘receiver’. However, where the debenture created fixed and floating
charges over the entire undertaking and business of the company, the
debenture holder may appoint a ‘receiver manager’.
o Powers and duties of receiver vary depending on how they’re appointed – who
receiver is acting as agent for
 o Debenture holder can appoint a receiver under (a) terms of the debenture for
stated reasons, or (b) by court order.
o Most debentures provide for the appointment of a receiver where “default
event” happens
o Including, for example, company defaults on payments/payments of interest
for a specified period of time, or company ceases to trade, or resolution is
passed to wind up the company
o Debenture holder owes no duty to the company in appointing a receiver, but
must only make appointment in good faith

They’re entitled to the rights under the contract or the court order. U don’t have to take into
account the interests of employees and other members. Small companies (not with a huge
assets, fixed amount) - they unable to run business afterwards. Liquidation is now higher,
during pandemic time.

Under debenture

 The validity of the appointment of a receiver is dependent upon compliance with the
terms contained in the debenture and the capacity of the company and authority of its
officers to create the debenture ab initio; if the debenture is invalid, so too will the
purported appointment of any receiver on foot thereof.

Appointed by court order

Debenture holder can apply to High Court for the appointment of a receiver if the debenture
does not give them power to do so themselves/for clarity on powers of receiver if unclear in
debenture.

Court appoints where:

(a) company is being or is about to be wound up;

(b) the creditor’s security is at risk; or,

(c) the company has fallen behind on its repayments

 Obligation to consider other options

 Court order will outline powers of receiver
 Court officer – owes duties to the court as well as to creditors of company

Receiver-managers

 Power to carry on business of the company with a view to using proceeds to discharge
debt.
 Usually where charge is over whole of company’s assets
 No duty to report to the company on the management of the business – primary duty
if to the debenture holder (the directors still have obligation to file; the directors are
still appointed)
  will have to share some infor with the company, while the directors are still obliged to
fulfill their obligations
 Don’t have to continue to manage business where that is to the detriment of the
debenture-holder’s interests

Re B Johnson & Co (Builders) Ltd [1955] 1 Ch 634: ́

“[a receiver-manager is] under no obligation to carry on the company business at the expense
of the debenture holders. Therefore he commits no breach of duty to the company by refusing
to do so, even though his discontinuance of the business may be detrimental from the
company’s point of view. Again, his power of sale is, in effect, that of a mortgagee, and he
therefore commits no breach of duty to the company by a bona fide sale, even though he
might have obtained a higher price and even though, from the point of view of the company,
as distinct from the debenture holders, the terms might be regarded as disadvantageous.

 Receivers must notify company and the Registrar of Companies of their appointment
 Receivers are not liable for any contracts of the company entered into before their
appointment, although the contracts are still enforceable against the company ́
 Re Newdigate Colliery Ltd [1912] 1 Ch 468 – duties of receiver manager includes
duty to preserve the goodwill and assets of company and inconsistent with this duty to
disregard contracts entered into before his appointment

Notice of appointment and removal of receiver

 Section 436(1) of the Act provides that where an order is obtained for the appointment
of a receiver, or a receiver is appointed pursuant to the terms of an instrument (eg an
appointment under a debenture), the person appointing the receiver (ie the secured
creditor) must, within seven days after the date of the order or appointment, publish a
notice of this in Iris Oifigiuil and deliver a notice of this in prescribed form to the
Registrar of Companies.
 In addition to s 436(1), s 429(1) of the Act seeks to put the public on notice that a
receiver has been appointed to a company, providing that where a receiver of the
property of a company has been appointed, every ‘invoice, order for goods or
business letter issued by or on behalf of the company of the receiver, being a
document which mentions the name of the company, must contain a statement that a
receiver has been appointed and any email sent by or on behalf of the company to a
third party must also contain a statement that a receiver has been appointed. It must
also appear on the company’s website and in emails.
 A default in respect of the foregoing obligations is a category 4 offence.

Information to be given to and by a receiver following appointment

Section 430(1)

Where the receiver is appointed to the whole or substantially the whole of a company’s
property, the following provisions apply:

(a) the receiver shall forthwith send notice to the company of his or her appointment;
(b) there shall, within 14 days after the date of receipt of the notice, or such longer period as
may be allowed by the court or by the receiver, be made out and submitted to the receiver in
accordance with section 431 a statement in the prescribed form as to the affairs of the
company; and

(c) the receiver shall, within 2 months after the date of receipt of that statement, send to:

1. the Registrar;
2. the court;
3. the company;
4. any trustees for the debenture holders on whose behalf he or she was appointed; and
5. so far as he or she is aware of their addresses, all such debenture holders,

a copy of the statement and of any comments he or she sees fit to make on it.

 Sections 430 and 431 will apply where a company is being wound up notwithstanding
that the receiver and the liquidator are the same person, but with any necessary
modifications arising from that fact.
o The statement of affairs which must be provided to the liquidator must show
the following information, as required by s 431(1), as at the date of the
receiver’s appointment:

a) particulars of the company’s assets, debts and liabilities;

b) the names and residences of its creditors;

c) the securities held by those creditors respectively;

d) the dates when those securities were respectively given; and

e) such further or other information as may be prescribed.

The statement of affairs must be submitted by, and be verified by affidavit or statutory
declaration of specific people.

The effect of the appointment of a receiver

o Any floating charges crystallise, and become fixed charges on the

assets/undertaking over which they were created;
o The powers of the company and the directors’ authority are suspended in
relation to the assets affected by the receivership, and can only be exercised
with the consent of the receiver;
o where the receiver is appointed as manager, then he is entitled to carry on the
business of the company;
o the receiver may, if he considers that the interests of the debenture holder so
require, dispose of any asset of the company affected by the debenture,
including the entire of its undertaking.
 The directors’ powers will continue save to the extent that they are ousted,
incompatible or otherwise superseded by the powers granted to a receiver in the
debenture on foot of which his appointment is made.

In the New South Wales decision in Hawkesbury Development Co Ltd v Landmark

Finance Pty Ltd Street J said:

Receivership and management may well dominate exclusively a company’s

affairs in its dealings and relations with the outside world. But it does not
permeate the company’s internal structure. That structure continues to exist
notwithstanding that the directors no longer have authority to exercise their
ordinary business-management functions. A valid receivership and
management will ordinarily supersede, but not destroy, the company’s own
organs through which it conducts its affairs. The capacity of those organs to
function bears a direct inverse relationship to the validity and scope of the
receivership and management,

In Lascomme ltd v United Dominions Trust (Ireland) Ltd and James Gilligan Keane
J held that company directors’ powers to maintain proceedings commenced against a
debenture holder were unaffected by the subsequent appointment of a receiver by the
debenture holder.

He also held, however, that the debenture holder’s position must also be considered
and that the directors were not permitted to interfere with the receiver dealing with the
company’s property which had been charged to the bank or otherwise imperil the
company’s assets which were the subject of the debenture.

The directors’ powers may not, however, be exercised in such a manner as to

inhibit the receiver in dealing with and disposing of the assets charged by the
debenture or in a manner which would adversely affect the position of the
debenture holder by threatening or imperilling the assets which are subject to
the charge.

In Re Cognotec Ltd McGovern J applied the decision of Keane J in Lascomme Ltd to

find that the directors of a company, which had provided financial assistance in
connection with the purchase of its own shares, could not convene a board meeting to
cause the company to void the security it had given on the grounds of a failure to file
the declaration required.

The status of a receiver

 Receivers appointed by the court: a receiver appointed by the court has the status of
an officer of the court. The significance of this is that such a receiver cannot concern
himself exclusively with the interests of the creditor who procured his appointment.
Rather, his concern ought to be the interests of all creditors of the company.
 Receivers appointed by a debenture holder: unless the contrary is stated in the
debenture, the receiver will be the agent of the debenture holder, and will only be the
agent of the company through necessity.

In Irish Oil and Cake Mills Ltd v Donnelly Costello J said:

 The receiver derives his appointment and his authority from the contract
entered into between the parties. In that case, as is usual, the parties agreed
that he is to be treated as the agent of the mortgagors, the plaintiff therein.
This provision protects the debenture holders from the liability as mortgagees
in possession and establishes the relationship between the receiver and the
company.

 The receiver as an agent of the company:

It is accepted that the relationship of agency created by a debenture between a receiver and a
company is an unusual one.

Irish Oil & Cake Mills Ltd v Donnelly [1963 – 1993] ICLR 564 ́

Costello J said:

The agency here is of course very different from the ordinary agency arising every day in
commercial transactions. Here the receiver has been appointed by the owner inequity of the
companies’ assets with the object of realising their security and for this purpose to carry on
the companies’ business.

The exceptional nature of his status is to be seen from the fact that notwithstanding his
appointment as agent he is to be personally liable under contracts entered into by him (with a
right of indemnity out of the assets) unless the contract otherwise provides…

 Limits of company’s power over receiver though – the company is unable to dismiss
this particular agent;
 Receiver personally liable for contract entered into by themselves after appointment,
whether contract signed by receiver in their name or company’s name. Debenture
usually contains a clause stating that receiver can seek to be indemnified from liability
for those contracts from company

Gomba Holdings Ltd. v Minories Finance Ltd [1988] 1 WLR 1231 –

Fox LJ:

“The agency of a receiver is not an ordinary agency. It is primarily a device to protect the
mortgagee or debenture holder.

Thus, the receiver acts as agent for the mortgagor in that he has power to affect the
mortgagor’s position by acts which, though done for the benefit of the debenture holder, are
treated as if they were the acts of the mortgagor.

The relationship set up by the debenture ,and the appointment of the receiver, however, is not
simply between the mortgagor and the receiver. It is tripartite and involves the mortgagor,
the receiver and the debenture holder.

The receiver is appointed by the debenture holder, upon the happening of specified events,
and becomes the mortgagor’s agent whether the mortgagor likes it or not. And, as a matter
of contract between the mortgagor and the debenture holder, the mortgagor will have to pay
the receiver’s fees.

Further, the mortgagor cannot dismiss the receiver, since that power is reserved to the
debenture holder as another of the contractual terms of the loan. It is to be noted also that the
mortgagor cannot instruct the receiver how to act in the conduct of the receivership. “

All this is far removed from the ordinary principal and agent situation so far as the mortgagor
and the receiver are concerned.

Whilst the receiver is the agent of the mortgagor, he is the appointee of the debenture holder
and, in practical terms, has a close association with him.

Moreover, he owes fiduciary duties to the debenture holder, who has a right, as against the
receiver, to be put in possession of all information concerning the receivership available to
the receiver...

The result is that the receiver, in the course of the receivership, performs duties on behalf of
the debenture holder as well as the mortgagor. And these duties may relate closely to the
affairs of the entity which is the subject of the receivership.

It was endorsed by Irish Supreme Court in Bula Ltd (in receivership) v Crowley [2003] 1IR
396 ́

Denham J confirmed the law that on the appointment of a receiver, two special relationships
were established which were founded on the agreements entered into between the parties.
These were between the company and the receiver on the one hand and the banks and the
receiver on the other hand.

I adopt this statement of the law. I favour especially the description of the agency of the
receiver as primarily a device to protect the mortgage.

...the receiver was put into place pursuant to agreements for the primary benefit of the banks
in this case. I adopt also the analysis of Fox LJ of the tripartite relationship of the receiver
involving the mortgagor, the receiver and the debenture holder, in other words, Bula, the
receiver and the banks. This is far removed from the routine principle agent situation

Referred to Cooke J in Rottenberg v Manjack [1993] BCLC 374: ́

It is quite clear, both from those powers and the purpose for which receivers are appointed
and the job they are called on to do, that their duty must be to secured creditors. They cannot
be put in the position, negligence and dishonesty apart, of having to weigh discretions
between the secured creditor and the debtor. If they behave efficiently and honestly, the
secured creditor must come first.

́ The receiver is in a unique and exceptional position. It is a position unlike that of the
ordinary agent in commercial transactions. Thus the receiver is treated, while in possession of
the company’s assets, as an agent of the company so that he may deal effectively with third
parties. But the receiver is concerned for the benefit of the mortgagee bank to realise the
security, which is usually, as in this case, by the sale of the assets. ́
  Receiver’s powers usually set out in loan agreement under which they are appointed
 Authority to act on behalf of company to arrange sale of assets/relevant asset

The remuneration of a receiver

Most debentures will provide that the receiver’s remuneration, costs, charges and expenses
will be discharged by the company to which he is appointed out of its assets. Many
debentures will expressly provide that the statutory provisions dealing with the remuneration
of ‘receivers of income’ shall apply to a receiver manager of all of the property and assets of
a company, a practice which is considered to be settled in law.

Section 444(2) of the Act provides that the High Court may fix the amount to be paid by way
of remuneration to a receiver, notwithstanding that the receiver’s remuneration has been fixed
by or under an instrument.

The Court’s power to make such an order is exercisable on the application of a liquidator,
creditor or member of a company in respect of a receiver of the property of the company,
appointed under powers contained in any instrument (eg a debenture).

Powers

 A court-appointed receiver’s powers are dependent upon the terms of the order of the
court appointing him. These will usually be to collect, get assets in and receive those
assets.
 One of the changes introduced by the Act was to introduce a series of statutory
powers for receivers to the property of a company whether appointed by court order
or on foot of a debenture.
 Modelled on section 420 of the Australian Corporations Law and implemented in
Ireland on recommendation of CLRG ́ Alleviates problems with poorly drafted
debentures

Section 437(1) of 2014 Act

Subject to the provisions of this section, a receiver of the property of a company has power to
do, in the State or elsewhere, all things necessary or convenient to be done for or in
connection with, or as incidental to, the attainment of the objectives for which the receiver
was appointed.

Section 437(2) and (3) of 2014 Act

Without limiting the generality of subsection (1) but subject to subsection (4) a receiver of
the property of a company has (in addition to any powers conferred by the order or
instrument referred to in subsection (4) or by any other law) power to do one or more of
the following things for the purpose of attaining the objectives for which he or she was
appointed:

(a) possession and control of property

(b) lease, let on hire or dispose of property

(c) grant options over property on conditions decided by receiver

(d) borrow money on security of property

(e) insure property

(f) repair, renew or enlarge property

(g) convert property of company into money

(h) carry on any business of the company

(i) to take on leave or on hire, or to acquire, any property necessary or convenient connected
with the business of the company

(j) execute any document, bring or defend any proceedings or do any other act or thing in the
name of and on behalf of the company

(k) to draw, accept, make and endorse a bill of exchange or promissory note

(l) use company seal

(m) engage or discharge company employees

(n) appoint solicitor or accountant or other professional to assist receiver

(o) appoint agent to do any business receiver is unable to do, or that it is unreasonable to
expect the receiver to do, in person...

(s) to make or defend an application for the winding up of the company

(t) to refer to arbitration or mediation, any question affecting the company

Section 437(5) of the Act provides that the conferral on a receiver of powers in relation to
property of a company does not affect any rights in relation to that property of any other
person other than the company.

The power to sue in the company’s name gives a receiver locus standi to make application for
a so-called ‘proprietary injunction’ to preserve the charged property.

Such an injunction should be distinguished from a Mareva injunction 👉🏼 so whereas a Mareva

injunction will operate to prevent a person from dealing with his own assets, an injunction by
a receiver (as agent of his principla company) will be to prevent dealing with the company’s
own assets (by its directors or indeed third parties) and so is in the nature of a proprietary
injunction.

Section 798(3)(b) of the Act confers locus standi on receivers to apply for an order directing a
director or other officers not to remove his assets from the State or to reduce them within or
without the State below a specified amount in certain circumstances.
The only circumstances in which it is thought that the court will make an order under this
section is where a receiver seeks to recover charged property from a director or other officer
which has been misappropriated or otherwise diverted away from the company.

Liquidators

Re Potters Oil [ 1986] 1 All ER 890

 Liquidator argued appointment of receiver over plant of company was. unnecessary

because liquidator was seeking to protect debenture holder’s interests and
appointment of receiver would only duplicate effort and expense.Debenture allowed
for appointment of receiver by debenture-holder
 Hoffman J was satisfied the debenture-holder could appoint the receiver – why?
o He had a contractual right to do so (i.e. under the debenture) and in turn get
the receiver to sell off the charged property and discharge the debt
o Furthermore, in light of this right, “[i]t would be no answer that the property
could be realised by the liquidator more cheaply and no less effectively.”

“The debenture holder is under no duty to refrain from exercising his rights
merely because doing so may cause loss to the company or its unsecured
creditors. He owes a duty of care to the company but this duty is qualified by
being subordinated to the protection of his own interests.”

Section 445 of 2014 Act:

On the application of the liquidator of a company that is being wound up

(otherthan by means of a members’ voluntary winding up) and in respect of
theproperty which a receiver has been appointed (whether before or after
thecommencement of the winding up), the court may make the following
order:

o ...(a) that the receiver shall cease to act as such from a date specified
by the court,and prohibiting the appointment of any other receiver, or
o (b) that the receiver shall, from a date specified by the court, act as
such only inrespect of certain assets specified by the court.

An order under subsection (1) may be made on such terms and conditions
asthe court thinks fit.

Duties of receivers
Owes to the company once appointed:

o Duty to exercise reasonable care in disposing of company assets

o Duty not to sell a non-cash assets of requisite value to specified persons
o Duty to report
o Duty to discharge company's debts in appropriate way
o Duties owed to guarantors
The statutory duties owed by receivers are dealt with as follows:

o The duty to provide information to the company

o Duties of receiver managers
o Duties arising on the disposal of assets
o Duties to guarantors
o Duties in applying the proceeds of sale of assets
o Duties to supply information to the Registrar of Companies and the Directors
of Corporate Enforcement

Duty to exercise reasonable care in disposing of company assets

o Recognised at common law that receiver has duty to try and obtain the best
price possible in selling the charged asset
o Since been supplemented by statute
o Section 439(1) of 2014 Act:

A receiver “in selling property of a company, shall exercise all reasonable care
to obtain the best price reasonably obtainable for the property as at the time of
the sale”

o Section 439(2)(b) of 2014 Act:

A receiver who breaches this duty is not entitled to compensation or

indemnification by the company for any liability that they may incur

Receiver may appoint and rely on advice of an expert, if unsure about sale reaching
best price obtainable, or apply to court for an order approving of sale.

o The meaning of ‘best price reasonably obtainable’ was considered by Murphy

J in Re Bula Ltd.

In that case a receiver sought approval for the sale of an ore body (a mine) to
the company’s adjoining landowner (and long-term fellow litigant) Tara
Mines Ltd. The company opposed the application. After examining the
receiver’s duties under the predecessor of s 439(1) of the Act, Murphy J held
that:

[The predecessor to s 439(1)] refers not to value nor cost but to price.
The receiver in selling the property of the company, which he is clearly
entitled to do, must exercise all reasonable care to obtain the best price
reasonably obtainable for the property at the time of sale… What the
court has to do is to ascertain that, given that a receiver has exercised
all reasonable care, that the ultimate price is the best reasonably
obtainable. That is the market ‘best price’.

Murphy J concluded that the receiver had exercised all reasonable care
necessary to obtain the best price and allowed his application to complete the
 sale of the mine to Tara. The company’s appeal to the Supreme Court was
dismissed.

There, Denham J, giving the decision of the Court, held that the receiver had
taken all reasonable care in the timing of the sale and that the receiver’s first
duty was to the secured creditor and he was not obliged to wait for the market
to rise.

Where it is apprehended that a receiver is not endeavouring to obtain the best

price reasonably possible, an injunction can be applied for to prevent the sale
of the mortgaged or charged property.

In Holohan v Friends Provident and Century Life Office the mortgagee had
entered into a contract to sell the mortgaged property without vacant
possession (ie it was subject to existing tenancies) and had refused to consider
an alternative. It was successfully argued by the mortgagor that if the
mortgaged property was sold with vacant possession, a higher price could be
obtained.

A contrasting case is Casey v Irish Intercontinental Bank Ltd, where an offer

of 111000 had been accepted by mortgagees who at the time of acceptance
had considered that to be the best offer available. Later, an offer of 190000
was received but rejected because of the prior contract. An application to order
the mortgagee to rescind the first contract was rejected by Kenny J who said:

The subsequent offer of 190 000 did not in any way invalidate that
contract which, in my opinion, Intercontinental were bound to carry
out. A mortgagee who enters into a contract for sale at a price which
all the circumstances and valuations show is, at the date of the contract,
the best price available is not discharged if a higher price is offered
after the contract is made

Sale of non-cash assets to past and present officers

S 439(3) of the Act provides that:

A receiver shall not sell by private contract a non-cash asset of the requisite
value to a person who is, or who, within 3 years prior to the date of
appointment of the receiver, has been, an officer of the company unless the
receiver has given at least 14 days’ notice of his or her intention to do so to all
the creditors of the company who are known to the receiver or who have been
intimidated to the receiver.

The expression ‘officer’ includes a person connected (within the meaning of s 220 of
the Act) to a director, shadow director or de facto director of the company.

Doesn’t specify if contract is void or voidable but receiver not entitled to be

compensated or indemnified by company for liability incurred because receiver
breached this duty.
Duties to guarantors

At common law, it was established in Standard Chartered Bank v Walker that a

receiver owes a duty of care to guarantors in disposing of mortgaged or charged
assets. The following passage of Lord Denning MR was cited by Carroll J in the Irish
High Court in McGowan v Gannon:

if it should appear that the mortgagee or receiver have not used reasonable
care to realise the assets to the best advantage, then the mortgagor, the
company and the guarantor are entitled in equity to an allowance. They should
be given credit for the amount which the sale should have realised if
reasonable care had been used.

Earlier, Carroll J had said that this case had held:

… that a guarantor could sue a receiver for negligence in disposing of the

assets of a company whose debts were guaranteed as there was sufficient
proximity between receiver and guarantor for the receiver to owe a duty of
care to the guarantor.

Ruby Property Company Ltd v Kilty: ́“the duty on a receiver is to exercise

reasonable care to obtain, at the time of the sale, the best price reasonably obtainable
for the property in question.

....[t]his duty of care in the case of a receiver is not only owned to the company but
also to the guarantors of the company’s liability. In addition, a mortgagee likewise
owe a duty of care to the mortgagor and to the guarantor of the mortgagor’s debts. In
Standard Chartered Bank Ltd v Walker [1982] 3 All ER938, 942, [1982] 1 WLR
1410, Denning MR said ‘If it should appear that the mortgagee or receiver have not
used reasonable care to realise the assets to the best advantage, then the mortgager,
the company and the guarantor are entitled in equity to an allowance. They should be
given credit for the amount which the sale should have realised if reasonable care had
been used.’...”

But, receiver does not owe a duty to report to guarantors in same way they don’t owe
this duty to the company

McGowan v Gannon [1983] ILRM 516:

́ I am not satisfied that a Guarantor is entitled to any information regarding

the sale of the company’s assets. The Guarantor is not in the same position as
a potential beneficiary under a discretionary trust. Nothing has been cited to
me to show that a Receiver is a trustee for a Guarantor. There is no contractual
relationship between the Guarantor and a Receiver.

Therefore in my opinion there is no basis on which a Guarantor can require the

information. That is not to say that a Receiver does not owe a duty of care to
theGuarantor of a company as was held in Standard Chartered Bank Ltd v
Walker &Anor. This is a different relationship altogether.
Duty to report

Under section 430(1) of 2014 Act – once receiver is appointed the company’s officers are
obliged to report to them/provide them with certain information

 Notice of appointment is sent to company and within 14 days company must swear
statement of affairs and submit this to the receiver.
 Statement of affairs must contain:
o Particulars of assets, debts and liabilities
o Names and residences of creditors
o Securities held by those creditors respectively
o Dates when securities were given respectively, and
o Further information as may be prescribe
 Counter – receiver also has a duty to provide certain information to the Registrar of
Companies
 Floating charge – section 430(3) of 2014 Act – within 30 days of (a)expiration of 6
months since appointment, and (b) expiry of subsequent 6-month periods. Also,
within 30 days of ceasing to act:
o Assets of company taken possession of, estimated value of assets and proceeds
of sale
o Receipts and payments during the 6-month period
o Aggregate amounts of receipts or payments during preceding periods since
appointment
 Non-floating charge

within 30 days of (a) expiration of 6 months since appointment, and (b) expiry ofsubsequent
6-month periods. Also, within 30 days of ceasing to act: ́ Assets of company taken possession
of, estimated value and proceeds of sale ́ Receipt and payments during that 6-month period ́
Aggregate amount of receipts or payments during preceding periods. ́ Either floating or non-
floating charge – category 4 offence for receiver to fail to comply

<aside> 📎 No general duty on a receiver/manager to account to the company whose affairs he

or she is managing during the course of the receivership

</aside>

Irish Oil & Cake Mills Ltd and Irish Oil and Cake Mills (Manufacturing) Ltd v Donnelly,
unreported, High Court, Costello J, 27 March 1984

 Company owed bank £1.9 million and defendant was appointed by bank as receiver-
manager over the company’s assets subject to two specific charges
 Receiver carried on business hoping to sell it as a going concern and begantrying to
realise its assets
 Plaintiff sought mandatory injunction directing receiver to furnish them with
information and accounts. Argued failure to provide information would constitute a
breach of duty of care owed to company and that duty to get best price obtainable
included a duty to “keep the Company appraised of how the business of the Company
is going”
  Argument rejected by Costello J ́

The argument was far-reaching and unsupported by any authority

However Costello J. accepted that there was a duty to report to the company in certain
special circumstances – he also said:

“The extent and nature of the duty and the extent and nature of the accounts he
must furnish will depend on the facts of each individual case.”

Costello J. noted that in Smiths Ltd v Middleton [1979] 3 All ER 942 it was held the
receiver had to provide an account of his management after a receivership had come
to an end – however, he viewed that case as limited to its own facts ́ The Smiths case
did not lend itself to the creation of the general proposition that a duty to account was
owed

Duty to discharge company's debts in appropriate way

It is settled law that where a receiver realises assets which are the subject of a fixed
charge or a legal mortgage his only obligation is to apply the proceeds of these in
discharge of the amount due and owing to debenture holder. Any surplus over from
the realisation can be paid back to the company, and is not to be applied in discharge
of any debts owed to preferential creditors.

 Fixed charges
 Where a receiver realises assets that are the subject of a fixed charge or a legal
mortgage
 He must pay off the debenture-holder/mortgagee and then pay the surplus to the
company

However, in respect of a floating charge, s 440 of the Act provides that before a
receiver can apply the proceeds realised in discharge of the debts owed to the
debenture holder, he is obliged to first pay the company’s preferential creditors.

Floating charges

 Before paying monies to debenture holder, receiver must discharge debts first in
following order:
o The costs of receivership;
o The fixed charges in the order that they were created;
o The preferential debts;
o The floating charges in the order they were created;
o The unsecured creditors

! If the company is not at the time in course of being wound up.

In United Bars Ltd v Revenue Commissioners certain companies had created

debentures which charged certain assets by both fixed and floating charges. The
receiver successfully realised two properties , and having paid the debenture holder
what was due and owing, was left with a surplus of 85 417. The issue to be decided by
the court was whether the receiver was obliged to pay this money to the company, or
to the Revenue Commissioners in discharge of sums due to them as a preferential
creditor.

Law

In his judgment, Murphy J referred to Re GL Saunders Ltd, where Nourse J had held
that where a company created both a fixed and floating charge over its assets, and the
receiver was left with a surplus of 444 000 from the sale of assets subject to the fixed
charge, that this money should be repaid to the company and not applied in payment
of the preferential creditors.

There, Nourse J relied on Re Lewis Martly Consolidated Collieries, where

******Tomlin J had held that a similar section applied only in respect of accounts
coming to a receiver which were the subject of a floating charge and not to the sale of
assets the subject of a fixed charge.

o A receiver’s duty under s 438 of the Act survives the making of a winding-up
order and compels a receiver to pay Revenue Commissioners in discharge of
preferential debts ahead of any liquidator.

In Re Eisc Teo a company created both a fixed charge charge over certain assets and a
floating charge over other assets. When the company defaulted on the loan, the
chargee caused a receiver to be appointed and the charged assets were realised. The
receiver paid off the chargee in full out of the fixed charge and was left in possession
of the proceeds of sale of the assets the subject of the floating charge. A liquidator
was later appointed and sought to compel the receiver to deliver up those proceeds,
less his expenses.

The receiver refused, believing he was under a statutory duty to apply the proceeds of
a floating charge in discharge of preferential creditors pursuant to the predecessor of s
440 of the Act. The liquidator argued that this had no application once a winding-up
order had been made and that in any event, the liquidator would be under a duty to
apply that money to the preferential creditors. Lardner J held that the receiver was
under a statutory duty to pay the preferential creditors.

In Re Manning Furniture Ltd (in receivership) it was sought to draw a distinction

between a liquidator and a mortgagee.

The facts were that a receiver had been appointed to a company on foot of a mortgage
debenture (incorporating a floating charge) and several chattel mortgages in favour of
ICC Bank plc. It transpired that, some years previously, the company had created a
mortgage in favour of what was then First National Building Society but that
mortgage had not been registered and application was made for late registration under
the predecessor of s 417 of the Act.

The receiver sold the chattles and at the time of seeking directions had contracted to
sell the premises and held a surplus of 150 000.
 The direction sought by the receiver was whether he was obliged to discharge the
sums due to the preferential creditors of the company before paying the balance to
FNBS.

After considering the finding in Re Eisc Teoranta, McCracken J noted the counsel for
FNBS had sought to distinguish that case on the basis that there the question was
whether the receiver should pay the revenue or the liquidator, whereas in the instant
case the question was whether the receiver should pay the revenue or the liquidator,
whereas in the instant case the question was whether the receiver should pay the
revenue commissioners or a mortgagee.

McCracken J refused to distinguish the two cases and went on to find that the Joplin
proviso in the order for late registration meant that FNBS’s mortgage took priority
after the Revenue Commissioners who had, under the predecessor of s 440 of the Act,
‘a right acquired prior to the time of the registration of the particulars of the
mortgage.’

Application for directions

 A receiver who finds that he is uncertain about the exercise of any powers or
purported powers which he has been granted in a debenture instrument or under s 437
may apply to court for directions in ‘relation to any matter in connection with the
performance or otherwise by the receiver, of his or her functions’: s 438(1) of the Act.
 Section 438(1) of 2014 Act: ́

Where a receiver of the property of a company is appointed under the powers

contained in any instrument, any of the following persons may apply to the
court for directions in relation to any matter in connection with the
performance or otherwise, by the receiver, of his or her functions, that is to
say:

o Receiver
o Officer of company
o Member of company
o Employees of company (at least half of persons employer in permanent
capacity)
o Creditor of company
o Liquidator of company

And, on any such application, the court may give such directions, or make
such order declaring the rights of persons before the court or otherwise, as the
court thinks just.

o Where an application for directions is made by a person other than a receiver,

it must be supported by such evidence as the court may require that the
applicant is being unfairly prejudiced by any actual or proposed action or
omission of the receiver.

Section 438(2) of 2014 Act:

An application to the court under subsection (1), except an application under
paragraph (a)(i) of that subsection [i.e. applications brought by receivers], shall be
supported by such evidence that the applicant is being unfairly prejudiced by any
actual or proposed action or omission of the receiver as the court may require.

Kinsella v Somers

Unreported, High Court, Budd J, 23 November 1999 –

Budd J – refused motion for directions because the applicant, a director and
shareholder, had failed to show that the information was required for a specific
purpose, stating that “since it was now apparent that the GasCompany was insolvent,
there was a lack of evidence as to how it could be alleged that the Application was not
being prejudiced by the activities or omission of the Receiver”

In Re HSS Clarke J said of the requirement to show ‘unfair prejudice’:

… it seems to me that the prejudice that is spoken of in the predecessor of s

438(2) of the Act is prejudice to the actual rights of individuals. In other
words, a creditor applying under [the predecessor of s 438(1)] needs to show
that that creditor’s rights might be unfairly prejudiced by an action (or, indeed,
inaction) of a receiver. It doesn’t gove the Court some general jurisdiction to
consider whether things are fair or unfair.

Cunningham & Anor v Bank of Scotland Plc & Ors [2016] IEHC 65:

The applicants sought directions relating to the validity of the mortgage debenture.
The first named applicant, being the director and the shareholder of the second named
applicant, had also challenged the validity of the appointment of the receiver and
sought various declarations and reliefs.

Murphy J: declined to grant any of the reliefs sought.

Held [section 438(1)] provided a mechanism for the disposal of issues that arose
during an insolvency and not to determine the substantive issues of the type raised by
the first named applicant.

The company, was not authorised to maintain an application for directions.

Member and creditor had a potential standing to seek directions, but the first named
applicant needed to produce evidence to show that he was unfairly prejudiced by the
actions of the receiver.

There was no evidence to show that the first named applicant was prejudiced by the
actions of the receiver while he sold the concerned property to the third named
respondent.

Common law duty – receivers must act honestly and in good faith
 o Although a receiver is usually deemed to be the agent of the company by
virtue of the terms of his or her appointment, their primary duty is towards the
debenture holder, who has appointed the receiver to protect their interest and
who is ultimately responsible for his or her remuneration. It follows that the
receiver’s relationship with the debenture holder is a fiduciary one, ie one of
trust, and that the receiver must show good faith towards the debenture holder
in the conduct of the receivership.

Holohan v Friends Provident & Century Life Office [1966] 1 IR 1

Receiver appointed by mortgagee entered into contract to sell property without

vacant possession and refused to consider alternative. Argued if sold with
vacant possession, would achieve higher price.

Court granted injunction

The defendants refused to look into the value of the plaintiff’s property on a
basis which their own surveyors advised would show a considerably higher
price than sale at investment value. Their minds ... were closed to this course.
This was not reasonable; in my opinion it was quite unreasonable.

 Receiver not obliged to wait for upturn in market though before selling and must
merely obtain best price reasonably obtainable in economic climate at time of sale

Casey v Irish Intercontinental Bank [1979] IR 364: ́

 Offer for £100,000 was accepted for lands – best price obtainable at
time.Subsequently someone made an offer for £190,000. Question arose was original
contract valid or should latter offer be accepted instead?
 Court held contract was valid and sum of £100,000 was:
 ...the best price and on that date they made an offer to the plaintiff to sell at that price
and he accepted it.
 A mortgagee who enters into a contract for sale at an agreed price, which all the
circumstances and valuations shows to be the best price available at the date of the
contract, is not discharged if a higher price is offered after the contract is made

Re Bula Ltd (No 4) [2003] 2 IR 430:

 Company planned to engage in mining operations and borrowed substantial sums

from a number of banks to finance operations
 Borrowings were secured on foot of mortgages and debentures entitling banks to
appoint receivers in the event of default
 In 1985 a receiver was appointed over the company’s lands, mine and ore deposits. ́
 Receiver applied to court for an order approving the sale of the assets
 High Court – Murphy J – approved the sale and held that receiver exercised all
reasonable care necessary to obtain best price.
 Supreme Court – upheld High Court decision. Satisfied receiver’s first duty was to the
creditor and was not under a duty to wait for the market to rise.

́ Denham J:
The receiver is in the same position as the mortgagee. The first duty of the receiver is to the
secured creditor. Thus, in proceeding to sale, the receiver may put the secured creditor’s
interests first. The receiver was not under a duty to wait for the market to rise.The receiver
took a rational decision in all the circumstances to proceed to sell the asset. Indeed, also, on
the evidence, it is clear that he took reasonable case in the timing of the sale. Therefore, the
submissions on behalf of the appellants that the receiver went to market at the wrong time
must fail.

 Court satisfied that in appointing and relying on expert advice, the receiver had
exercised all reasonable care to obtain the best price reasonably obtainable.
 Receiver may reject expert advice though.

Lambert Jones Estate Ltd v Donnelly, unreported, High Court, O’Hanlon J, 5 November
1982:

 Plaintiffs were the company, its directors, shareholders and unsecured creditors.
 Sought injunction preventing receiver from selling the entire site of the companyas a
single unit by public tender.
 Argued expert advice showed a more profitable method of realizing the asset was to
divide site into portions/smaller units, apply and obtain planning permission and
create schemes of developments to be sold individually
 Receiver also got expert but refused to accept proposals. Receiver was
satisfieddividing property and getting planning permission would involve long delays
andrequire additional funds. Interest would continue to accrue on debt and
anyadditional profit from divided out sale would be eaten by that interest.

Lambert Jones Estate Ltd v Donnelly, unreported, High Court, O’Hanlon J, 5 November
1982: ́ O’Hanlon J: ́

 Noted the receiver was anxious to sell to minimise the enormous burden of interest on
the debt
 Receiver didn’t want to involve himself in new and costly and protracted planning
applications for multiple units of property
 Agreed there were no funds available to finance such transactions
 Receiver intended to get court approval for any proposed sale of the site as a whole
 No negligence or breach of duty on the receiver’s part

Courts won’t evaluate transaction with benefit of hindsight when determining if best price
obtainable

Re Edenfell Holdings Ltd [1999] 1 IR 443: ́

Receiver appointed on foot of debenture held by AIB when company had defaulted in
payment of loan. Charge over lands held by company.

There are proceedings already in being in respect of the property before the receiver’s
appointment

Stormdust Ltd. brought proceedings seeking specific performance of an agreement between

it and the company to sell the lands to it for £920,000
  High Court – held that there was no enforceable agreement by the company to sell the
lands to Stormdust
 Stormdust appealed this decision to the Supreme Court

Anglo Eire Property Company Ltd. then offers £1.6 million for the lands

 This offer was subject to there being a successful outcome of the appeal pending
before the Supreme Court in the Stormdust proceedings

Astra Construction Services Ltd. then offers to purchase the lands for £1.5 million and
agreed to close the sale by the 19th December 1996, and to pay Stormdust £100,000 in
consideration of their withdrawal of their appeal to the Supreme Court ́

 Stormdust agrees to this

 Receiver discusses the Astra offer with two auctioneers, who advised him to accept it,
and he does

The questions on appeal:

 Was the Astra offer the best one?

 If details of Astra offer had been disclosed to Anglo would they have upped their
offer? ́
 Should the receiver have taken the Anglo offer(which was €100,00 more than Astra
offer) and simply awaited outcome of Stormdust proceedings?
 Company directors argued that the Stormdustappeal would be dismissed as there was
no merit to it

Receiver argued the Astra offer was the best one ́ Said the highest value given to the land by
his own experts was £1.2 million

The uncertainty created by the Stormdust appeal would be removed by accepting the Astra
offer ́ Removing the appeal was vital because the interest accruing on the debt was
approximately £12,000 per month

This offer left a surplus of £45,000 would be available for company creditors

Receiver said the indications from the other interested parties did not contain the element of
certainty involved in the Astra offer

High Court (Laffoy J.) did not think the Astra offer was best one – held the Receiver did not
get thebest price reasonably obtainable for the lands –why? Because :

“There is no evidence whatsoever that theReceiver gave any consideration to whether paying
£100,000 out of the £1.6 million pounds, which was available to acquire the lands [i.e. from
the Anglo offer], to Stormdust to procure the withdrawal of the appeal at that juncture was a
reasonable and prudent course...”

Re Edenfell Holdings Ltd.

Supreme Court allowed the appeal:“It is not the function of the court in a case such as this to
decide,with the benefit of hindsight, whether it might have been better forthe creditors and
anyone else interested in the property had theReceiver rejected the Astra offer and continued
to deal with AngloEire or anyone else who might be interested. The court was dealingwith
the matter with the advantage of hindsight: the Receiver hadto deal with the matter then and
there and in the light of the expertadvice available to him from a valuer. Having tested the
marketagain, without any response in the form of an unconditional offer,he was entitled, in
all the circumstances, to take the view he did,that accepting the Astra proposal was the more
prudent course.” ́

Ruby Property Company Ltd v Kilty, unreported, High Court, McCracken J, 1 December
1999: ́

 Company and directors argued receiver had not obtained the best price reasonably
obtainable for the property.
 Argued receiver should have put the property up for public auction and advertised
sale in newspapers and by advertisements at the premises itself.
 Instead, receiver accepted offer from Superquinn forth premises at value of£102,500,
after getting expert advice from auctioneers that this was good price in light of limited
development potential
 MacCracken J noted that expert advice made no mention of advertising and instead
recommended tenders only be sent to persons who had expressed an interest in the
property

Company sought order setting aside transaction on grounds that receiver sold at undervalue

 Receiver brought motion to dismiss proceedings on grounds the action was frivolous
and vexatious
 McCracken J refused to dismiss the plaintiff’s proceedings as he was satisfied it was
arguable from the evidence before him that the sale may have been made at an under
value
 McKechnie J: ́ Receiver had properly exercised his duty

Laid down principles that are helpful for understanding case law

Principle 1 – legal binding contract

 If without breaching his duty, a receiver has entered into a binding contract for the
sale of the company’s asset at a fixed price, he is bound to perform that contract even
if at a later date, but prior to completion, he is in receipt of a substantially higher
offer. ́
 The same principle applies where a higher offer emerges post-completion

Principle 2 – duty determined at time of sale

A receiver’s duty is both to be determined and evaluated at ‘the time of sale

A receiver is not required to postpone, defer or cancel a sale in the hope of the market
improving.
Principle 3 – no duty to sell immediately

There is no duty to wait & conversely there is no duty to sell immediately to avoid a possible
decrease in value

Principle 4 – duty of care owed to both company and guarantors of company’s

liability ́

This duty of care in the case of a receiver is not only owned to the company but also to the
guarantors of the company’s liability (i.e. persons who give their own personal guarantee that
the company will pay the debt)

A mortgagee also owes a duty of care to the mortgagor and to theguarantor of the
mortgagor’s debts

Standard Chartered Bank Ltd v Walker - Denning MR:

‘If it should appear that the mortgagee or receiver have not used reasonable care to realise the
assets to the best advantage, then the mortgager, the company and the guarantor are entitled
in equity to an allowance. They should be given credit for the amount which the sale should
have realised if reasonable care had been used.’...

This duty does not extend to unsecured creditors of a company

Principle 5 - not bound to exercise the duty to sell for best price in a set way

 Receiver does not have to exercise this duty in any preset way to adopt a specified
approach in how he particularises the property
 In Holohan v Friends Provident & Century Life Office the Supreme Court did not
find that the defendant had to offer the property for sale with vacant possession
 Instead the Supreme Court’s finding was based on the fact that themortgagee gave no
consideration to the alternative method of selling theproperty with vacant possession
(i.e. the receiver totally failed to consider this option)
 No predetermined, fixed or rigid rules by which such disposal of property must take
place
 Sale can take place via public auction, can be advertised in any way, experts can be
hired, etc
 McKechnie J. -

“In each situation, an individual assessment must be made, but provided the duty resting upon
the receiver or mortgagee is discharged, the actual method of disposal is not determinative...”

Principle 6 – must consider all relevant issues

Obliged to give due weight to any qualifications, demands or conditionsattached thereto or

other benefits linked to the price offered

McKechnie J. – “this so that the full, true and total value of such offer can be evaluated...”
Principle 7 – cannot avoid liability by blaming agents

 There is no defence in law for a receiver to plead that the act or omission in question
was solely the legal responsibility of competent and reputable agents employed by
him
 His/her duty is a personal one and is not necessarily discharged by the mere exercise
of reasonable care in identifying and engaging competent experts
 Receiver will not be excused from liability by pleading the engagement ofagents or by
any purported delegation of that duty

Principle 8 – court won’t look at case with benefit of hindsight

 See Edenfell
 In deciding whether a receiver is negligent, a court must judge his/her conduct at the
time of and in the light of the facts and circumstances asthese previously existed
 Hindsight should not be used
 Whether ‘the best price’ reasonably obtainable was in fact obtained is a matter of
historical fact to be established through admissible evidence –the court will not assess
the value of a lost chance

Duty not to sell a non-cash assets of requisite value to specified persons

Section 439(3) of 2014 Act:

A receiver shall not sell by private contract a non-cash asset of the requisite value to a person
who is, or who, within 3 years prior to the date of appointment of the receiver, has been, an
officer of the company unless the receiver has given at least 14 days notice of his or her
intention to do so to all creditors of the company who are known to the receiver or who have
been intimated to the receiver

Non-cash asset, requisite value and officer – meaning under section 238 of the2014 Act

Doesn’t specify if contract is void or voidable but receiver not entitled to be compensated or
indemnified by company for liability incurred because receiver breached this duty

Company Law II - Receivers.pdf

Liabilities of receivers

The liability of a receiver arises primarily in respect of contracts entered into by him on
behalf of the company.

Section 438(4) of the Act provides:

A receiver of the property of a company shall be personally liable on any contract entered in
by him or her in the performance of his or her functions (whether such contract is entered by
the receiver in the name of such company or in his or her own name as receiver or otherwise)
unless the contract provides that he or she is not to be personally liable on such contract.
Where a receiver chooses not to fulfil a contract which has been entered into by a company,
persons thereby affected may bring proceedings against the company for breach of contract.

However, a receiver will not, as a general rule, in the absence of bad faith while acting within
his authority be liable for a breach of a contract by the company, nor be guilty of inducing
breach of contract.

In Lathia v Dronsfield Bros Ltd, the first defendant company contracted to supply the
plaintiff with certain goods, and when the company failed to do so the plaintiff began to sue
it, and joined the second and third defendants who were managers and receivers to the first
defendant company, alleging inducement to breach of contract. The receivers were successful
in having the proceedings against them struck out for showing no reasonable cause of action.

The agent has an immunity from a claim for inducing breach of contract unless he has not
acted bona fide or acted outside the scope of his authority, ie had not acted as agent.

On authority, one must look at the context to determine to whom the duties are owed.
Primarily, they owe a duty to the debenture holders, and also as agents to the company. In my
judgments, they do not owe a duty to the general creditors, to contributories, to officers of the
company, and members.

Resignation and removal of receivers

a) Resignation

It is now the case that a receiver appointed by a debenture holder can resign upon giving 30
days’ notice to holders of fixed and floating charges over the company’s property, and to the
company and (if applicable) to its liquidator. A receiver appointed by court can only resign
with the consent of the court: s 434(2) of the Act. A failure to comply with these
requirements is a category 4 offence.

b) Removal by the court

Section 435(1) of the Act empowers the court, upon cause being shown, to remove a receiver
and appoint another in his or her place, and this power of the court is couched in wide and
general terms. Misconduct on the part of the receiver is not necessary, and where it is shown
that the interests of the general creditors are best served by removing the receiver, as it was in
Re Keypak Homecare Ltd, the receiver will be removed.

 Removed in accordance with terms of debenture/where found guilty by court of

misconduct/removal in general interests of creditors
 Section 435(1) of 2041 Act – removal allowed where “cause if shown”
 Also, can be removed where examiner is appointed, provided petition to appoint
examiner is brought within 3 days of receiver’s appointment.

c) Removal of receiver at the instigation of a liquidator

Section 445(1) of the Act provides that a liquidator can apply to court to have a receivership
which began either before or after the commencement of the winding up, to be determined or
limited. Thus, the court may order that the receiver shall cease to act as such and order that no
further receiver be appointed, or may order that the receiver shall form a certain time act only
in respect of certain assets specified by the court.

d) Removal of receiver at the instigation of an examiner

Where an examiner is appointed within three days of the receiver’s appointment, the
examiner may apply to court for an order under s 522(1) of the Act.