Receivership

RECEIVERSHIPS
Re: P. Elliott Limited
One of the largest construction company in Ireland went into receivership in May, 2011 with debts of over €500 million. The company’s main creditors were Bank of Ireland, NAMA (as a result of loans from Anglo Irish Bank), Bank of Scotland Ireland and ACC Bank. One of the big losers in the context of Elliott Limited had been the sub-contractors as currently they are owed in excess of €20 million.
Re: Superquinn Limited
Receivers were appointed to the Superquinn chain of supermarkets in July, 2011. The chain, which was established by Fergal Quinn in the 1960’s currently employs around 3000 people directly and indirectly many more. In July, 2011 the chain had debts of around €400 million. The receiver was appoint ed by a syndicate of Banks, AIB, Bank of Ireland, National Irish Bank and others. It was a term of the contract appointing the receiver that all full time staff would continue to be employed during the period of receivership and the receiver even though he was called a manager was actually a financial supervisor with existing managers continuing to run and manage the business. In 2005 Fergal Quinn sold on the chain of supermarkets to Select Retail Holdings for €450 million and the chain has recently been bought out of receivership by Musgrave Limited. Practical Issues
1. When a receiver is appointed to a company the directors and
secretary/financial controller of that company must deliver to the
receiver within a period of 14days a Statement of the companies
financial affairs with details of its assets, its liabilities, its creditors,
secured (Bank) and unsecured and details of the security which may
have been given for loans.
2. If the receiver that’s appointed is also appointed manager then all
documentation going out from the company must include the words “in
receivership”. Failure to comply with this is an offence (the purpose of
this is to put suppliers on notice of who they are dealing with).
3. If the receivership is a fairly lengthy process as is the case with some
companies the receiver has a duty to report to the company and to its
members ever six months to update them as to the company’s correct
financial position and the direction which the company is going.
4. If the receiver discovers something suspicious in the process of
undertaking his duties eg. fraud, deceit, reckless or fraudulent trading
he has an obligation to report this to the Office of the Director of
Corporate Enforcement (ODCE) who is entitled to initiate legal
proceedings against those deemed responsible.
The Order of Priority for the Receiver in Relation to Paying Debts.
1. The costs of the Receiver.
2. Fixed charges in the order in which they were created
3. Preferential debts (wages, tax, salaries, rates, esb)
4. Floating charges.
5. Unsecured creditors (ordinary creditors).。