Written by Robert Thyer in September, 2009

We find that many people do not appreciate that it is both legal and not uncommon for more than one appointment to be made to a company or individual at the same time. In fact there have been a number of matters within this Firm where concurrent appointments have been made, and this Firm has acted in all the relevant roles available.

What creditors have to understand is that the different functions have distinctly different roles. Two of the most common are Liquidator, Trustee or Administrator concurrent with a Receiver or Receiver and Manager.

Receivers and Managers are generally appointed by a Secured Creditor, primarily to look after the Secured Creditors interest. Whilst a Receiver and Manager may trade on a business in order to realise assets of the business or sell the business as either a “going concern” or merely as a collection of assets, a Receiver quite commonly only has the power of sale.

Voluntary Administrators on the other hand, are normally appointed by the Directors of the company to help them get the company’s affairs under control and open avenues for negotiations with Creditors, with a view to achieving an amicable and equitable solution for all parties involved. It is interesting to note that the Corporations Act also grants Secured Creditors with the power to appoint a Voluntary Administrator but it appears to be rarely used.

The major distinction between the appointment of an Administrator and the Receiver and Manager in most cases is that the Administrator generally no longer has, or is extremely limited in the opportunity to trade on the business and/or secure and deal with any of the company’s assets. These responsibilities, as well as many others, now constitute part of the Receivers and Managers responsibilities.

Further to the above, additional responsibilities that get transferred to the Receivers and Managers upon their appointment include, but are not limited to:

• Control of Company assets, including realisation of same

• Company’s debtors

• Any and all trade on issues

• Company’s insurance, both property and worker’s compensation

• Reporting to ASIC

Employee claims and trade on wages, and

• Operational issues.

On the other hand Administrators generally deal with:

• All remaining creditor claims including collection of proofs of debts

• Insolvent trading investigations

• Preferential payment investigations

• Reporting to the Australian Securities and Investment Commission about the directors and the companies activities.

With the above in mind, it makes a clear distinction between the role of an Administrator and the role of the Receiver and Manager.

Where there is more than one Secured Creditor it is possible that each such creditor can appoint their own Receiver over the assets that they control, and it’s at this time that the fun starts!

As you can imagine, with the increasing number of appointments the costs will no doubt grow exponentially.