Mattie McGrath (Tipperary, Independent)
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688. To ask the Minister for Jobs, Enterprise and Innovation if she will address the urgent need to introduce stricter regulations regarding the practice of receivership; and if she will make a statement on the matter. [5652/17]

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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Receivership arises from a private contractual relationship between a lender and a creditor (usually a company). A receiver is a person who is appointed on behalf of a secured creditor to sell the particular company asset which has been charged in favour of that creditor. A receiver is appointed under a) the terms of the debenture for stated reasons or b) by court order. Most debentures today provide for the appointment of a receiver where a "default event" occurs. As the receiver is appointed under the terms of a debenture, it goes without saying that she or he will act as the creditor’s agent.

Section 433 of the Companies Act 2014 sets out the categories of persons who are disqualified to act as the receiver of a company e.g. an undischarged bankrupt; an employee or an officer of the company concerned or a person who was such within the period of 12 months before the date of the commencement of the receivership; certain specified family members of an officer of the company concerned.

Receivership is a remedy that derives from the courts of equity and indeed the relevant law in relation to receivership is largely made up of rules which the courts have developed by applying general contract law and equitable principles. Under the Companies Act 2014 the receiver has specific statutory duties under section 439 which provides that:

(i) receivers must achieve the best  price reasonably obtainable at the time of sale; and

(ii) the receiver must not sell by private contract a non-cash asset of a company to a person who is or who, within three years prior to the date of appointment of the receiver, has been, an officer of the company unless the Receiver has given 14 days’ notice of his or her intention to do so to all creditors of the company who are known to him or her or who have been intimated to him or her.

These statutory duties make it imperative that the receiver obtains expert legal and valuation advice in relation to the sale of property, consistent with the duty “to obtain the best price reasonably obtainable”. Breach of a receiver’s statutory duties may result in the receiver being held personally liable for any loss incurred.  Conferring statutory powers on receivers in the Companies Act 2014 was intended to alleviate many of the problems which may arise from poorly drafted debentures.

It should be noted that receivers also have a statutory duty to provide certain information to the Registrar of Companies and the Office of the Director of Corporate Enforcement.