A receiver is appointed by a creditor, typically a bank or finance company who holds a General Security Agreement against the company.
The receiver is tasked to take over the trading of the company and holds much of the powers of a director, such as entering contracts, selling assets and hiring of staff. The key difference between a receiver and a liquidator is that a liquidator is to act in the best interests of all creditors, while a receiver acts in the interest of its appointer. However, the receiver is still required to ensure that recoveries from the companies are maximized.
As in liquidations, the director’s powers cease upon the appointment of a receiver and the classes and priority of creditors remain the same.
The receiver resigns from office once sufficient funds to repay the debt of the appointer have been recovered or, all assets of the company have been realised.