Compulsory Court Ordered Receivership
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Whilst compulsory court ordered receivership may sound a bit like secure floating credit receivership, it is also quite different at times. The creditor does not always have a secure line of credit with the company which means they will need to petition the court and give notice of receivership. In this case, there are very strict guidelines for providing receivership notices that must adhere to strict timelines. Once the court receivership is ordered, the court will appoint an official receiver, an officer of the court, who will take over the operations of the company until such time that the creditors appoint a receiver to act in their interest.
Court appointed receivership is generally temporary, but there are certain times when the court ordered receiver stays in place. For instance, if the government is alleging wrongdoing on the part of the business or the owners, the official receiver will stay in place until the charges are cleared or until the business is sold or handed over to another entity. In any case, a court appointed receivership follows strict regulations which are the same in England, Wales and Northern Ireland. Scotland has its own rules in place.
It is not always possible to avoid the scrutiny of the government but it is most often possible to avoid creditor compulsory receivership and liquidation. A good debt rescue company or licensed Insolvency Practitioner can often negotiate a voluntary arrangement to both the company's and creditor's advantage. Once compulsory court ordered receivership is entered into, it is difficult to work negotiations. Although it is sometimes possible it is not probable. In the long run, it is much wiser to seek counsel at the first sign of financial distress before receivership is set in motion. Receivership could result in total loss whereas voluntary arrangements can enable you to keep your company solvent until finances become more stable.
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