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Understanding the Role of Receivers and the Implications of "Going into Administration"

In the UK, a receiver is a qualified insolvency practitioner appointed by a secured creditor to recover assets that have been pledged as security for a loan or debt. Receivership can be voluntary or court-appointed, and their primary responsibility is to secure the assets and sell them to repay the debt. Receivership is a form of insolvency and is different from liquidation, which is the process of winding up a company's affairs and distributing its assets to creditors.

The receiver's primary responsibility is to take control of the assets of the company and dispose of them for the benefit of the secured creditor. In practice, this means that they will take charge of the company's finances, including bank accounts, and sell assets such as property or stock to repay the debt owed to the secured creditor. Receivership can be a difficult and complex process, especially if there are many assets to be sold or if there are disputes over the ownership or value of the assets.


When a company is unable to pay its debts as they become due, it may go into administration. This is a legal process that allows a company to restructure its affairs and continue trading, with the aim of avoiding liquidation. An administrator is appointed to take control of the company's affairs and to develop a plan to rescue the company or to achieve a better result for creditors than would be achieved through liquidation.


Going into administration can be voluntary or court-appointed, and the administrator has broad powers to manage the company's affairs. They can, for example, negotiate with creditors, sell assets, or seek new investors. The administrator's ultimate goal is to achieve a better result for creditors than would be achieved through liquidation. In some cases, this may mean selling the company as a going concern, while in others, it may mean breaking up the company and selling the assets separately.


The implications of going into administration can be significant for a company and its stakeholders. It is a sign of financial distress and can lead to a loss of confidence from customers, suppliers, and investors. However, it is also a mechanism for restructuring and may provide an opportunity for the company to survive and continue trading. It is essential to seek professional advice as soon as possible if a company is facing financial difficulties to determine the best course of action.


In conclusion, understanding the role of receivers and the implications of going into administration is critical for anyone involved in the world of business. Receivership is a form of insolvency that allows a secured creditor to recover assets pledged as security for a loan or debt, while going into administration is a legal process that allows a company to restructure its affairs and continue trading. Both processes can have significant implications for a company and its stakeholders and require careful consideration and professional advice.


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About the author


Sabbir Rahman is Managing Director of Langdon Capital. He has held prior roles with Morgan Stanley, Lazard and Barclays Investment Bank. He has executed over £60 billion in notional value of transactions across financing, M&A and derivatives with global corporates, private equity funds and financial sponsor groups.


About Langdon Capital


With a network of 700+ alternative investors, Langdon Capital raises debt and equity capital between £1m and £25m for high-growth and innovative companies in the technology, environmental impact and renewable energy sectors, who are preferably beyond a Series A funding round or equivalent, to help them fulfil their paths to profitability and growth ambitions.




This is not financial advice or any offer, invitation or inducement to sell or provide financial products or services or to engage in any form of investment activity.

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