Written answers

Tuesday, 11 July 2017

Department of Jobs, Enterprise and Innovation

Financial Services Regulation

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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97. To ask the Minister for Jobs, Enterprise and Innovation the current regulatory framework for receivers appointed by banks; her plans to introduce changes in this area; the oversight in place with regard to the level of fees charged by receivers; the recourse an affected borrower has that is of the view the fees charged in respect of their assets are excessive and unjustifiable; and if she will make a statement on the matter. [32405/17]

Photo of Frances FitzgeraldFrances Fitzgerald (Dublin Mid West, Fine Gael)
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Receivership is a remedy that derives from courts of equity. 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. Receivers are appointed under a relevant security e.g. a mortgage or a charge which contains the contractual terms in relation to their appointment and their powers under the instrument. Depending on the circumstances of the case, courts may also, on application from a secured creditor, exercise their discretionary powers to appoint a receiver. Receivers can also be appointed under the Land and Conveyancing Law Reform Act 2009 in the case of mortgages created after 1 December 2009, and the Conveyancing Act 1881 for mortgages created prior to that date.

Section 437 of the Companies Act 2014 confers statutory powers on receivers and is intended to alleviate many of the problems which may arise from poorly drafted debentures. However, section 437(4) makes clear that these powers are limited by any provision in the instrument under which the receiver was appointed, again underlying the essentially contractual nature of receivership.

A receiver has specific statutory duties under section 439 of the Companies Act 2014 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. 

Section 444 of the Companies Act 2014 allows a liquidator, a creditor or a member of a company to apply to the High Court for an order to fix the amount to be paid to a receiver, notwithstanding that his or her remuneration has been fixed by the instrument appointing the receiver. If the receiver has been paid previously in excess of the amount fixed by the court, the court order may extend to requiring him or her to account for the excess or such part of it that may be specified in the order.

The Companies Act 2014 applies to receivers generally but my Department has no role in relation to the regulatory framework for receivers appointed by banks which are entities regulated by the Central Bank.

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