Receivership, Liquidation, Financial and Special Administration
As the name implies, the Insolvency Division serves clients with specialist services covering all aspects of insolvency practices, which are financial administration, receivership, voluntary or insolvency liquidation and special administration. In all respects, the objective of performing insolvency administration onto a company is to restore it to financial stability in re-empowering it to repay its debts particularly to the secured creditor.
In the current environment, often when the reasons for the company’s failure are discovered, it is already too late to save it from ultimate dissolution. Therefore, the appointment of an administrator under the financial administration services enables an attempt to be made to close the stable door before it is all too late. This exercise is instrumental in stalling the company’s decline and enabling it to continue in existence. The process will enable the administrator to elicit facts for the Banks and will assist the subject companies in formulating and strategizing a sound financial structure and administration. Sometimes further rescue efforts to refinance, restructure, merge, take-over or enter into a scheme arrangement are contrived to bail the company out from acute financial distress. This effort, of course at the instruction of the Bank, could be undertaken before or after the company is put under receivership.
Receivership, in one form, involves a Receiver protecting and enforcing the rights of a secured creditor in taking possession of the property secured, to receive income from the properties or assets and to apply it in accordance with the terms of the document under which the power of appointment arose. Usually the borrowing instrument also provides the appointment of Receiver/Manager whose functions are to keep the company alive whilst he seeks to get in the amount due. This is another form of receivership.
Once a company determines that it is no longer commercially useful, it may voluntarily be dissolved from its natural characteristic of perpetual existence. True too, if the company became insolvent with unprofitable trading, it may be demanded to be wound-up by its creditors voluntarily or by litigation at Courts. In any instance, a Liquidator shall be appointed to realize the assets of the company and to ensure an orderly distribution of the proceeds arising from the realization to those persons entitled.