Midlands Business Insider
Freehold feature – September issue
Some commentators have suggested that in the current recession Law of Property Act Receivers (LPAs) will be more active as banks try to protect their financial interests and recoup some of their investments from now struggling businesses.
Graham Green, Partner in Fraser Brown’s Commercial Property team, comments
"LPAs are popular when a bank has a charge over a specific property as the receiver is able to take complete control of the property and can ultimately exercise a power of sale. The LPA will, however, also be responsible for discharging certain liabilities relating to the property."
"However whilst the current climate means we are still seeing businesses in trouble, administration still seems to be the most common course of action as opposed to appointing an LPA. Administrations have become far more common since the Enterprise Act 2002 came into force which was intended to promote a new rescue culture whilst also attempting to strike a balance between the interests of all creditors. Banks historically preferred to appoint administrative receivers who owed duties primarily to secured creditors. Administrators owe their duties to all credtiors. The power to appoint an administrative receiver now only applies to limited circumstances, such as by the holder of a floating charge created before 15 September 2003. The structure of limited companies also has practical implications on the appointment of LPAs, as it is often simply easier for a bank to put a company into administration than to assign a LPA to each property within a portfolio."
Fraser Brown is a dynamic law practice working at premises in Nottinghamshire through its branches in Nottingham, Radcliffe on Trent and Bingham.
Its philosophy is to deliver superior legal advice through a personal and highly professional service for both commercial and private clients. Since 1990, Fraser Brown has acquired eight established and respected local firms as part of its major growth strategy for doing business in the 21st Century.
Fraser Brown is one of the region's longest established firms of solicitors. Over the last 12 months, it has experienced significant growth in areas such as property, contract work, construction and general litigation.