The following is a list of frequently asked questions and answers. The answers are based on a general set of circumstances and are for illustrative purposes only. If you are in any doubt as to the action you should take, you should consult your own professional advisors.
Q: Who is the Interim Receiver?
A: An Interim Receiver is an independent third party (often a firm of accountants) that is a specialist in insolvency. The Interim Receiver is appointed by the Court, typically following an application by a creditor.
Q: What is the role of an Interim Receiver?
A: The role, powers, and obligations of the Interim Receiver are set out in the Court order authorizing its appointment. In general, the role of the Interim Receiver is to act as custodian (on behalf of creditor(s)), to protect the assets of the company and ensure they do not disappear or dissipate in value before a Receiver or Trustee in Bankruptcy is appointed, and to report to the Court as and when required.
Q: Is an Interim Receiver the same as a Receiver? If not, how are they different?
A: An Interim Receiver is a distinct and separate appointment from a Receiver. A Receiver is appointed to take possession of and realize upon the assets under a security agreement and to distribute the proceeds to creditors. An Interim Receiver however, will not sell the assets of the company unless it is property which is perishable or likely to quickly depreciate in value; or it is required to do so by the Court. Additionally, an Interim Receiver will not be responsible for distributing the proceeds of sale to creditors. Funds realised by an Interim Receiver are held in trust pending the appointment of a Receiver or a Trustee in Bankruptcy.
An Interim Receiver is appointed on a temporary basis, usually prior to or in conjunction with another insolvency process such as a Notice of Intention to Make a Proposal, a Proposal, Bankruptcy, or Receivership through which a distribution will be made to creditors.
Q: Does the appointment of an Interim Receiver mean that the Company is in Bankruptcy or Receivership?
A: Generally no. An Interim Receiver is usually appointed during the period prior to the company being declared Bankrupt, while the Court is considering a creditor’s petition to place the Company into Bankruptcy. An Interim Receiver may also be appointed by the Court during the ten-day notice period which is required to be given by a secured creditor before it is permitted to take action against the Company. An Interim Receiver may also be appointed during a Notice of Intention to Make a Proposal or a Proposal.
Q: Who manages the Company during an Interim Receivership?
A: The owner(s) and/or management and the employees of the company will continue to manage and operate the Company during an Interim Receivership. The Interim Receiver is a custodial or monitoring role. The Interim Receiver has neither the right nor the responsibility for running the day-to-day operations of the business during its appointment.
Q: Who is responsible for paying the Company's bills during an Interim Receivership?
A: The Company continues to be responsible for paying bills as they are incurred during an Interim Receivership. The role of the Interim Receiver does not include the duty or right to repay debts of the company.
Q: As a supplier, should I continue to provide goods and services to the Company following the appointment of an Interim Receiver?
A:This decision should be considered on a case by case basis by the supplier. Goods and services which are provided during the period of Interim Receivership will have no greater priority than the goods and services provided previously.
Q: As a supplier, can I repossess my goods/inventory after an Interim Receiver has been appointed?
A: No, Section 81.1 of the Bankruptcy and Insolvency Act does not apply to Interim Receiverships.