GAVIN MOONEY and CLIODHNA JUDGE discuss types of insolvency, and explain how a Chartered Surveyor might take on the role of receiver.

Opportunity for Chartered Surveyors
Although a receiver may be drawn from a company or a partnership, the receiver acts in his or her own name. Hence, if a Chartered Surveyor is appointed as receiver, he or she can hire a solicitor to advise on legalities and an accountant to assist with financial reporting. In general, competitive professional rates can be earned as a receiver, but excessive fees or expenses may be open to challenge by the borrower (whose agent the receiver is) or the lender (if the borrower has no assets).

If a Chartered Surveyor is hired by a liquidator or an examiner or a receiver, his or her duties differ, from those that would arise were he or she retained by a solvent customer. The receiver hires a Chartered Surveyor to advise or to act as agent, in which case achieving the best price within instructions generally applies. If the Chartered Surveyor is the receiver, he or she becomes the principal, which means that there is no party from whom to seek instructions, and responsibility for decisions rests with the receiver.

This can be onerous, but as with most things commercial, insurance is available.

It is no surprise that recessionary times lead to an expansion in insolvency opportunities. Each time a company or borrower gets into financial difficulty, there is some form of insolvency practitioner waiting to advise the unpaid supplier, chargeholder or preferential creditor on how best to seek maximum advantage and secure optimum priority when the diminished assets become available for distribution.

Perhaps the most readily understandable insolvency role is that of liquidator. Quite simply, a liquidator is appointed (by the company’s shareholders or creditors or a court) to wind up a company, which literally means converting all of the company’s assets to cash, and distributing that cash in accordance with strict statutory rules.

Another role is that of examiner. An examiner may be appointed to an insolvent company if the High Court can be persuaded that there is a core business capable of rescue. The principal interest is in saving jobs, and the mode by which this is achieved is by reducing company debts to a level where fresh investment can be raised. If the terms of debt reduction mean that creditors fare better than they would in a liquidation, the restructuring can be forced upon certain creditors.

Receivers, although habitually classified with liquidators and examiners as insolvency practitioners, occupy a very different space in the world of debt recovery and management.

Choice of receiver
The principal distinguishing feature of receivership in the context of insolvency is that, unlike liquidation or examinership, it is not confined to companies and draws its existence from entirely different bases. Receivers are appointed (by deed, by a court or pursuant to statute) to manage an asset or a collection of assets, which are the subject of a charge, with the express purpose of protecting the value of that asset or those assets for the holder of the charge.

It is generally accepted that accountants are, in most circumstances, best suited for appointment as liquidators or examiners, given the onerous financial record keeping and returns demanded of them.

Further, if a lender has a charge over the “assets and undertaking” of a company (usually a “floating charge”), in the event of default by the company, the floating charge crystallises and becomes a fixed charge over all the charged classes of assets of the company on that day. As this typically includes all the assets of the company (including fixed assets, stock and debtors) the lender generally appoints a receiver and manager whose task it is to run the business of the company in the interest of the lender, until the lender decides on its course of action.

Again, accountants are obviously suitable for appointment as this type of receiver and manager.

In many ways, because it deals with the entirety of the assets of a company, receivership following crystallisation of a floating charge has a lot in common with liquidation and examinership. There is, however, a completely different class of charge from a floating charge, which is asset specific, and in many cases the appointment of accountants as receivers simply adds an additional layer to the costs, which are usually borne by the chargeholder in seeking to protect itself.

Asset-specific charges are generally called fixed charges and, when held over property, are simply old-fashioned mortgages as understood before the Land and Conveyancing Law Reform Act, 2009. It is because of the very targeted subject matter of such charges that receivers appointed when the borrower is in default can be specifically chosen to maximise recovery and minimise costs. Clearly, if the charge was over shares of a public company, a stockbroker may be the most appropriate receiver, and if the charge was over real estate, the most obvious and appropriate receiver would be a competent Chartered Surveyor.

(Lest anyone believe, however, that the appointment of Chartered Surveyors as receivers is a phenomenon of the current recession, 19th century law books and reports abound with examples, and indeed, if any readers care to Google the Irish case of Lyster v Burroughs, a very old but practical example of a court appointment can be examined.)

Of course, depending on the type of property that was the subject of a charge, the individual skill set of Chartered Surveyors may also require consideration prior to appointment: empty industrial units may need to be sold at best price as quickly as possible; partly occupied office buildings may require expert tenant management and letting skills for any vacant parts; and, development land may require a specialist surveyor with experience of site assembly and planning permission.

General powers and duties of fixed charge receivers
Prior to seeking an appointment, any potential receiver should carefully consider the duties accompanying it.

Regardless of the asset over which the charge was held, or the professional background of the appointee, all receivers have essentially the same primary function, i.e., to realise the assets within the scope of the security for the benefit of the chargeholder.

If a receiver is appointed by the court, his or her powers will be outlined in the court order. Where the receiver is appointed under a mortgage deed, loan document or other security instrument, the legal nature of his or her relationship to the borrower and the security holder is governed by contract, and Section 108 of the Land and Conveyancing Law Reform Act, 2009. If a receiver is appointed under the National Asset Management Agency Act, 2009, his or her powers and duties are set out in that Act (see Part 9, Chapter 3 and Schedule 1).

In the absence of contrary provision, a receiver is regarded as the agent of the lender. In practice, however, there is usually an express stipulation in the security (and at Section 149 of the NAMA Act) that the receiver is the agent of the borrower over whose assets he is appointed. This is important for the receiver and parties dealing with him or her: that contracts made by the receiver are not underwritten by the lender, and personal liability rests on the receiver for debts and contracts incurred by him or her after his or her appointment and for torts, negligence or omissions in the performance of his or her duties.(1) In reality, however, a receiver will typically seek indemnification in this regard from the borrower’s assets, if there are any.

In addition, receivers appointed over assets of a company have incidental duties pursuant to the Companies Acts and must, for example, send a statement to the Office of the Director of Corporate Enforcement (ODCE) as to their opinion on the company’s solvency at the end of the receivership(2) and deliver abstract reports to the Companies Registration Office every six months.(3) On request, a receiver may be required to furnish certain information, such as his or her books, to the ODCE, and comply with any reasonable requests of that office.(4) Failure to do so is an offence.

There are also tax implications. Section 3(7) of the VAT Act, 1972,5 requires the receiver to make VAT returns and to account for any VAT due on the supply by him or her of goods owned by the accountable person, i.e., the borrower, regardless of whether the business continues to be carried on. Section 9(2A)6 stipulates that a receiver must register for VAT within 14 days of the disposal of goods.

Receivers are also responsible for accounting for tax on a chargeable gain arising on the disposal of a capital asset,(7 )which may need to be done on an apportioned basis.(8)

Where the receiver is a member of a professional body, there is a statutory duty on that body to report to the ODCE should they have grounds to believe that the receiver has failed to keep appropriate records or has committed an offence under the Companies Acts.(9)

Failure to do so is in itself a criminal offence.

In general, identifying the parameters of the receiver’s role should not be very difficult, but if any of the foregoing causes unease, perhaps it would be unwise to volunteer

Work and pay
It must be noted that receivers are individuals, not firms. Although a receiver may be drawn from a company or a partnership, the receiver acts in his or her own name. In general, a receiver can engage such staff as he or she believes are necessary to discharge his or her duties, and is empowered to take such advice as is necessary. Hence, if a Chartered Surveyor is appointed as receiver, he or she can hire a solicitor to advise on legalities and an accountant to assist with financial reporting. In general, competitive professional rates can be earned as a receiver, but excessive fees or expenses may be open to challenge by the borrower (whose agent the receiver is) or the lender (if the borrower has no assets).

If a Chartered Surveyor is hired by a liquidator or an examiner or a receiver, his or her duties differ from those that would arise were he or she retained by a solvent customer. The receiver hires a Chartered Surveyor to advise or to act as agent, in which case achieving the best price within instructions generally applies. If the Chartered Surveyor is the receiver, he or she becomes the principal, which means that there is no party from whom to seek instructions, and responsibility for decisions rests with the receiver. This can be onerous, but as with most things commercial, insurance is available.

Duty of care
Even where the receiver is deemed to be an agent of the borrower, in all cases his or her primary duty of care is to protect the interest of the entity that appointed him or her.(10) The receiver will owe a duty to the borrower to the extent that there is some element of borrower’s equity in the asset after the loan is discharged. This duty also extends to any guarantor of the borrower’s debt, so the main aim should always be to properly market the asset and obtain the best price. Apart from that, no duty is owed to individual creditors of a company(11) or to individual directors, shareholders or employees.(12)

The intention of this article is to give an overview of the general insolvency landscape, identify where receivers fit into it, and suggest where in receivership the best opportunities lie for Chartered Surveyors. It must be remembered, though, that being a receiver is very different from acting as a traditional agent for the sale or management of property assets, and given its history and the diverse sources of the rules governing the role, it is not for everyone.


  1. S.316(2), CA 1963.
  2. S.52(a), CLEA, 2001, inserts s.319(2A) CA 1963.
  3. Ss 319, 321, CA 1963.
  4. S.323A CA 1963, as inserted by s.53, CLEA, 2001.
  5. Inserted by s.78, FA 1983.
  6. Inserted by s.80, FA 1983.
  7. S.571 TCA 1997.
  8. S.571(2), (3), (4) TCA 1997.
  9. S.58, CLEA, 2001.
  10. Bula v Crowley [2003] 1 IR 396.
  11. McKechnie J in Ruby Property Co Ltd v Kilty,  31 January 2003, unreported, HC.
  12. Burgess v Auger [1998] 2 BCLC 478

Gavin Mooney BL
Gavin has been a practising barrister since 1998, specialising in commercial, construction and property law. Prior to qualifying as a barrister, he obtained a Bachelor of Commerce degree and a Masters in Business Studies form UCD, and worked in property management in Ireland and the UK, and with the Revenue Commissioners.

Cliodhna Judge BL
Cliodhna is a practising barrister. She graduated with a BA in International Business and Languages, and worked in corporate, commercial and retail banking for 15 years. She also has a Masters in Business and Information Technology from Smurfit Business School, and a Diploma in Accounting and Finance from the ACCA.