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RECEIVERSHIP MEANING: OUR NURTURING 8 POINT CHEAT-SHEET ANSWERS WHAT IS RECEIVERSHIP - YouTube
Channel: Ira Smith
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hello
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for those of you that don't know me my
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name is
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ira smith president of
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ira smith trustee and receiver inc
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firstly the ira smith team hopes that
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you
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and your family are safe healthy and
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secure
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during this covet 19 pandemic
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ira smith trustee and receiver inc is
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fully operational
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both myself and brandon smith
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are available to answer any questions
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you might have
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either by telephone or video meeting
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we are holding all meetings that way
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in order to keep everyone safe and
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healthy
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today's brandon's blog is about the
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meaning
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of receivership he provides his
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checklist of things you should know
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he's not trying to make you an
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insolvency
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expert but to give you the main
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highlights
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so that whenever the topic of
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receivership might come up
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you will know what everyone is talking
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about
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and you will be able to hold your own in
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any conversation
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so i hope you can watch until the end of
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this video
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i know you will get value from it
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what does it mean when a receiver is
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appointed
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receivership is a remedy for secured
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creditors
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a chartered bank or another lender
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loans money to a company and takes back
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security against the assets of the
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company
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as collateral for the loan
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if the loan goes into default
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under the security agreement there'll be
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various events of default
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and upon one or more of those events of
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default
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the secured lender has the right to
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appoint
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a receiver and receiverships
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are part of the bankruptcy and
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insolvency act
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in canada only a licensed insolvency
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trustee
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can be a receiver there are two kinds of
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receivership appointments
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either a private appointment or a court
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appointment
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a private appointment the secured
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creditor
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retains the receiver and appoints the
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receiver
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in writing and the receivership
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begins actually before the secured
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lender can do that
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they have to give written notice of
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default
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to the borrower the company and make
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demand on the company for
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full repayment of the loan
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and the secured creditor must give at
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least
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10 days written notice before
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enforcing its security now the company
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the borrower can waive the 10-day notice
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but the secured creditor cannot
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the second kind of appointment is a
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court appointment
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that's where the secured creditor
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believes that the supervision powers
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and the authority of the court and aid
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of the court
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in making the necessary decisions
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will be required
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there may be contentious issues legal
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issues practical issues
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where the authority of the court is
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required
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in that case after the secured creditor
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demands and the 10-day notice
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expires the secured creditor can make a
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motion
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to the court for the appointment of
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the receiver when the receiver is
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appointed
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the first thing the receiver must do is
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go into possession and control
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of all the assets of the company covered
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by the lender's
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security the receiver must make an
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inventory of all the assets make sure
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they're safeguarded
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make sure they're adequately insured no
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matter
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where they may be located
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as well the receiver must identify are
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there any third-party goods on the
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premises
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or any goods where suppliers still have
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the right of re-vindication
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now keep in mind that the business was
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probably
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operating right up until the time of the
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appointment of the receiver
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so the receiver also very quickly has to
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make
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other decisions such as was the business
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before the receiver was appointed or was
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it still running
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and therefore if it was still running
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does it make sense for the receiver to
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continue the business operations
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are there any experienced employees
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willing to
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work for the receiver in order
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to keep running the business will the
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assets of the company
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be worth more if they're sold on an
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operating business basis
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rather than on a shutdown liquidation
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basis
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can the receiver operate the business
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cash flow
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positive if the receiver believes that
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the assets
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will be worth more on an operating
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business
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basis but cannot operate on a cash flow
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positive basis
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then the receiver has to know where it
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can borrow the money from
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in order to cover the negative cash flow
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and in pretty well every case
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the only place that the receiver will be
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able to borrow from
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the only place the only person anyone
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will be willing to lend money is the
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secured creditor
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that appointed the receiver secured
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creditor in that case would have to be
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willing to fund the losses are there any
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legal
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regulatory or environmental issues
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that would preclude the receiver from
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operating the business
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the business be run safely these are
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just some of the considerations
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for the receiver the receiver has to
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answer those
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questions very quickly in order to
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get a game plan set up
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get the approval of the appointing
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creditor
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and if it's a court appointment to
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write a report to court serve all the
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parties
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and get court authority for
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the tasks the steps that the receiver
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wishes to carry out
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a question we are always asked is what
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is the difference between
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receivership insolvency and liquidation
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so i hope by now from what i've already
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spoken about
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you have a very basic but good
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understanding
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of what receivership is so what is
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insolvency or insolvent
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that is a financial condition the
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insolvent
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company cannot pay its debts
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as they normally come due and
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perhaps also if you had to liquidate
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all the assets you would not get
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enough cash to pay off all of the
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companies liabilities
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it is a financial condition that is the
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definition of insolvency
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liquidation i've already spoken briefly
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on what a liquidation
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sale is that is when the assets of the
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company
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are being sold off because the business
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is not being
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run anymore the assets are being
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liquidated
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that's the first example there's also
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something called a statutory liquidation
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that happens when the shareholders of a
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solvent
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company a financially healthy company
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decide that they're not going to run the
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business anymore
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the assets are collected in terms of
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receivables the assets are sold off
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in terms of inventory and equipment
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intangibles
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patents trademarks and then you're left
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with the cash
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because the business is solvent the
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company is not only able to pay off
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all of its liabilities with the cash
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but they are also potentially able to
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provide a return to the shareholders
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that is what a statutory liquidation
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is all about another question we are
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asked is how does a receiver get paid
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a receiver has a legal right
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to the having a first charge on
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all the assets of the company subject
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only to any trust funds
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claims that there may be against
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the assets as well the receiver will get
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the guarantee of the appointing creditor
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to fund the costs
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of the receivership including the fee
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and disbursements of the receiver
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if there are sufficient assets
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to have a realization that will pay back
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the secured creditor in full including
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all the costs of the receivership
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then the secured creditor does not
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suffer any loss
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however if the assets are insufficient
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then the secured creditor will suffer
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a shortfall so i hope
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that you have gained a basic yet
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good thorough understanding of what
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the meaning of receivership is
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the ira smith team is very experienced
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in advising companies
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that are in financial trouble advising
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lenders of companies
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in financial trouble and in acting
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as a receiver we understand
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the concerns and issues facing the
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entrepreneur
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of an insolvent troubled company
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we understand how to restructure those
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kinds of companies
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so hopefully they will stay far away
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from receivership or bankruptcy
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we know that it is not the
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entrepreneur's fault
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there are many conditions today
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that have caused business interruption
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that are well beyond the control of the
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entrepreneur
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so i hope you've enjoyed this video
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if you have any questions at all or need
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any help or assistance at all give
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either
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brandon smith or myself a phone call
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shoot us an email message we would love
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to hear from you
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and we would love to speak with you so
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the ira smith team
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hopes that you and your family
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remain healthy safe and secure
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