Insolvency Appointments by Secured Creditors

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The ASIC Insolvency Statistics include details of appointments as Receiver, Controller, Managing Controller and Receiver & Manager. All of these appointments are by secured creditors, usually banks or other financiers.

Included in the total number of insolvencies is the number of appointments by secured creditors which will include Receiverships, where a secured creditor appoints an external party, and Controllerships, where a secured creditor takes control of an asset itself. In the year to July 2014, those appointments have decreased 6% to 1,216 compared to the average of the previous five years.

The lesson for directors of companies in financial difficulties is that banks are not as patient as they used to be. When in doubt a bank will not wait for a director to sort out a company’s financial problems. So if you are a director and you are in discussions with your bank or are about to reveal some bad news to your bank we strongly recommend that you speak to us first.

Banks and other financiers will often take a mortgage or charge over a business’s assets when they lend money. When a business goes bad a Bank can be in a privileged position when it has that charge as it can take possession of assets as Mortgagee in Possession or appoint a Receiver & Manager.

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