Take Care When Appointing a Receiver Over a Borrower Company

Published by Strettons -


The latest tip from our Receivership team

It is generally known that under section 33 of the Insolvency Act 1986, the Receiver must accept the appointment by the end of the next working day following receipt from the Lender. Less well known is that the appointment is considered effective at the time at which it is received, not at the time the Receiver accepts.

This creates a potential problem. Here is an example and solution:



The Receiver receives the appointment by email while he is out of the office at 1pm. At 5pm, he reads the email, does a conflict check, checks the validity, and accepts the appointment.

That seems fine, right? It is within the timescale prescribed in the Insolvency Act.

But what happens if, unbeknown to the Lender or Receiver, the property burned down at 3pm, and the Borrower did not have insurance in place? In our experience, the insurance premium is one of the first things the Borrower misses when short of cash, and we often find that the Borrower’s cover has expired without the Lender being aware.

If the Receiver’s appointment is (by statute) retroactively effective from 1pm – and insurance was only in place at 5pm – then the Lender and Receiver are in trouble.

The Lender might, in theory, have a claim against the Receiver, but in most cases, the Receiver’s indemnity will protect him, so the Lender could be left with no security other than a pile of ashes.



The Lender and Receiver should liaise to ensure that the Receiver is in place to accept the appointment – and place insurance cover – as soon as the appointment arrives. This way, there is no time gap between receipt and acceptance and so no risk of the property not being insured.

Suppose solicitors make or send the appointment before the Receiver is set up for acceptance. In that case, the Receiver should prepare the set up and request a new appointment email containing the documentation, making it clear that the acceptance is on the basis of the new appointment email.


Britt Clark

We are a leading, independent firm of property advisors with expertise across a wide range of commercial and residential property. Our in-house services include agency, auctions, management and valuations to provide comprehensive advice.

Link to Strettons business profile

Leave a reply

Be the first one to comment
Choosing the Right Leisure Business for Sale
What are the different types of leisure business for sale ?
Read more
What to do if Your House has a Dry Rot Infestation
Dealing with dry rot can be difficult. Compared to wet rot, dry rot is far more dangerous and can spread quickly without showing signs of damage.
Read more
Homeowner’s Guide to Permitted Development
Permitted Development (PD) rights are an important factor for many homeowners wishing to make improvements to their homes without the need to obtain planning consent.
Read more