Section 10: Closing a Local Company - ACRA

96 Closing a Local Company
10.3 Receivership
A company may be placed under receivership when it is in financial
difficulties and is unable to repay its creditors. Receivership is a method
for creditors to get their money back from the company. This is because
the receiver appointed by the creditor will try to recover payment for that
creditor by controlling some or all of the company’s assets.
The powers of the receiver will be stated in the terms of the debenture.
Debenture…
A debenture is a document that states the terms of a loan and
may also contain the creditors’ rights to appoint a receiver if the
company fails to repay. However, do note that not all creditors
have the right to appoint a receiver. If the creditor is allowed to
appoint a receiver, the debenture will further state the powers of
the receiver. Some receivers can control the entire property and
business of the company, while some receivers can only control
certain assets of the company.
Receiver…
A receiver is a person appointed to take control of some or all of
a company’s assets. A receiver may be appointed by a court or a
secured creditor. The receiver will work for his appointer and try
to recover the amount owed by the company to them.
When the company is under receivership, the directors will lose their
power and control over the company’s assets. However, the directors are
still responsible for carrying out their duties under the Act such as holding
the Annual General Meeting and filing the returns on time.
Unlike in liquidation, the company is still an existing entity and may
continue with its business at the end of a receivership.