Receivership during voluntary administration occurs when a secured creditor appoints a receiver to take control of specific company assets and sell them to recover a debt. While the administrator manages the overall business, the receiver focuses only on secured assets, often influencing the outcome of the administration process.
On This Page
- Introduction
- What Is Receivership in Voluntary Administration?
- How Receivership Works
- Voluntary Administration vs. Receivership
- Important Points to Remember
- Next Steps
- FAQs
Introduction
When a company enters voluntary administration, many assume all creditor actions are paused. In reality, secured creditors can still act—and may appoint a receiver to take control of key assets.
This can significantly change how the process unfolds, including who controls the business and how funds are distributed.
This blog explains what receivership means during voluntary administration, how the roles of the administrator and receiver differ, and what it means for creditors, employees, and the overall outcome.
What Is Receivership in Voluntary Administration?
Receivership is a process where a secured creditor, such as a bank, appoints an independent person to take control of and sell specific company assets to repay a debt.
When receivership occurs during voluntary administration, it introduces a separate layer of control over certain company assets. Understanding how this works is critical, as it can directly impact outcomes for creditors, employees, and the business itself.
How Receivership Works
1. Control of assets
A receiver takes control of specific assets that are secured against a debt, such as property, equipment, or cash. These assets may be managed or sold to recover what is owed.
2. Timing (13-day window)
Secured creditors generally have a limited window—typically 13 business days from the start of voluntary administration—to appoint a receiver and enforce their rights over secured assets.
3. Appointment
The appointment of a receiver is made by a secured creditor, usually under the terms of a security agreement or loan arrangement.
4. Duties and responsibilities
The receiver is responsible for managing and realising the secured assets in a commercially reasonable way, including taking steps to achieve fair market value.
5. Division of control
Control of the business may be split, with different parties overseeing different aspects—one managing the broader business and another focusing specifically on secured assets.
Voluntary Administration vs. Receivership
The key aspects on which voluntary administration differs from receivership are on the roles of the administrator (for Voluntary Administration) and the receiver (for receivership).
- Who appoints whom
The administrator is appointed by the company directors, while the receiver is appointed independently by the secured creditor (typically a bank).
- Duties and responsibilities
The administrator must act in the best interests of all creditors and aim for a fair outcome. In contrast, the receiver’s primary duty is to the secured creditor who appointed them, focusing on recovering the secured debt.
- Division of control
The administrator manages the overall business and legal process, while the receiver focuses only on the secured assets. This split in control can influence how the administration unfolds and what outcome is ultimately achieved.
The below table summarises the differences between the two processes:
| Feature | Voluntary Administrator | Receiver |
| Appointment | Appointed by the company directors | Appointed by a secured creditor like a bank |
| Primary duty | Owed to all creditors to ensure a fair outcome | Owed specifically to the secured creditor who appointed them |
| Scope of control | Manages the day-to-day business and overall legal breathing space | Focuses on specific assets used as collateral for a loan |
| Main goal | To save the business or maximise returns for everyone | To recover money by selling specific assets to repay a debt |
Important Points to Remember
- Receivership can override administration protections: If appointed within the 13-day window, a receiver can take control of secured assets despite the general freeze on creditor actions.
- Directors lose control immediately: Once an administrator or receiver is appointed, directors can no longer manage the business or deal with company assets.
- Secured creditors act first: Receivers focus on recovering secured debts, which can significantly influence what remains for other creditors.
- Employee entitlements depend on asset type: Employees may receive priority for wages and super when circulating assets (like cash or stock) are sold—but not necessarily for fixed assets like property.
- Funds flow in a strict order: Proceeds from asset sales are applied first to receiver costs and secured debts. Any surplus is passed to the administrator for distribution.
- Receivers must act commercially: They are legally required to sell assets for market value or the best price reasonably achievable—not at a discount.
- Personal liability can apply to receivers: Receivers may be personally liable for certain ongoing costs (such as rent or trading expenses) if they continue using company assets.
- Landlords and leases still matter: If the receiver continues to use leased premises, they may need to pay rent and comply with lease obligations.
- Strict compliance requirements apply: Both administrators and receivers must investigate and report potential misconduct, including insolvent trading.
- Company operations are tightly controlled: New bank accounts must be opened, and all financial activity is monitored separately from pre-appointment debts.
- Directors must cooperate fully: All books and records must be handed over, even if they contain sensitive information.
- Share transfers are restricted: Shares cannot be sold or transferred without approval from the administrator, receiver, or the court.
- ASIC reporting deadlines may be extended: Companies under administration or receivership typically receive a six-month extension for required filings.
Next Steps
Understanding how receivership works alongside voluntary administration is important. If a receiver has been appointed, the next step is to:
- Confirm whether a receiver has been appointed
- Identify which assets are under receivership
- Determine who you should deal with (administrator or receiver)
- Check what control the receiver has over the business
- Review your position as a secured or unsecured creditor
- Monitor any asset sales by the receiver
- Check what payments have been made (and what hasn’t)
- Lodge a Proof of Debt (POD) if required
- Keep all documentation organised
- Follow updates from the administrator and receiver
- Seek legal advice if your position is unclear
Acting early helps you understand where you stand and reduces the risk of missed claims or confusion between the roles of the administrator and receiver.
At Halo Advisory, we work with the director. Financial expert Greg Bartels offers a no-obligation, confidential conversation to help you understand where you stand, what risks exist, and what options are realistically available before deadlines reduce control. Get in touch today.
FAQs
Can a receiver stop the business from trading completely?
Yes. If continuing to trade does not help recover the secured debt, the receiver may shut down operations or move quickly to sell assets or the business.
In some cases, a receiver may continue trading temporarily if it increases the value of the business before sale. The decision is based on what best serves the secured creditor’s recovery.
Do unsecured creditors get anything during receivership?
Usually only if funds remain after the secured creditor and receiver’s costs are paid. In many cases, this amount is limited or non-existent.
Any surplus from asset sales is passed to the administrator, who then distributes it according to creditor priority rules.
Does receivership mean the company will be liquidated?
Not always, but it increases the likelihood. If key assets are sold off, the business may no longer be viable, which can lead to liquidation.
However, in some cases, the business (or parts of it) may be sold as a going concern, allowing operations to continue under new ownership.
Can directors challenge the appointment of a receiver?
Only in limited circumstances. A challenge may be possible if the appointment was not valid under the security agreement or if proper procedures were not followed.
These situations are complex and typically require legal advice.
Who pays the receiver’s fees?
The receiver’s fees are paid from the assets under their control. These costs are usually prioritised before repayments are made to the secured creditor.
This means the value of available assets directly affects how much can be recovered by other parties.
Can a receiver take control over bank accounts?
Yes. If the bank accounts are covered by the secured creditor’s charge, the receiver can take control and redirect funds to recover the debt.
This can impact the company’s cash flow and ability to continue operating.
Does receivership affect personal guarantees?
No. If a director or individual has provided a personal guarantee, the secured creditor can still pursue them separately for any shortfall after asset recovery.
Receivership deals with company assets—it does not remove personal liability.
Can the business be sold as a going concern by the receiver?
Yes. If it maximises value, the receiver may sell the business as a whole rather than breaking it up into individual assets.
This approach can preserve jobs, maintain contracts, and achieve a better financial outcome.
What happens after the receiver finishes their role?
Once the secured debt is recovered (or asset sales are completed), any remaining matters usually shift back to the administrator or, if applicable, a liquidator.
At this stage, remaining funds (if any) are distributed to other creditors according to legal priority.
