Fixed Charge Receiver Or Administrators ' The Pros And Cons?

• Published date: 21 June 2023
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Directors and Officers
• Law Firm: DMH Stallard
• Author: Mr Frank Bouette

Fixed charge (or LPA) receiverships are increasingly popular when it comes to enforcement of security over property, particularly when it involves defaulting property developer borrowers. So, what is the difference between that and administration; and what are the pros and cons of each.

Pros and cons in brief

Administrators have a duty to all creditors of the borrower and are governed by a set priority of objectives. They are:

(a) to rescue the company as a going concern
(b) failing that, to achieve a better return for creditors as a whole than liquidation
or (c) failing that, to achieve a better return for secured and preferential creditors than liquidation.

Failing any of those, then the company should move to liquidation. Consequently, administrators have reporting...