Hi there. A company will enter receivership when a receiver is appointed by a secured creditor (a type of party to whom the company owes money) or, in some circumstances, by the court. The receiver’s job is to take control over some or all of the company’s assets and sell them to repay the outstanding debt. The law recognises that a receiver acts in a commercial capacity and has discretion as to how they do their job. This means a receiver is mostly free to make commercial judgments about salvaging the company without scrutiny from shareholders or an external body such as the Australian Securities and Investments Commission (ASIC) or the courts.

In your case, the receiver’s decision to reject an arrangement whereby an alternative financier would be involved to pay off the debt is likely to be considered a matter of commercial judgment and a decision based on various factors. A receiver is under several legal duties (such as the duty to take reasonable care to not sell company property for less than market value), and these duties may have influenced the receiver’s decision about the financier.

This is not to say that all “commercial judgments” of a receiver cannot be scrutinised. If you believe there is evidence that the receiver has acted illegally or failed to perform the duties of their role, ASIC may investigate. Complaints and reports of misconduct against receivers can be made to ASIC (infoline@asic.gov.au) or by calling 1300 300 630. If this is unsuccessful, your next option would be to take formal legal action as a shareholder against the receiver, by requesting the courts to order an inquiry.

Suggested way forward

First consider whether you have evidence to substantiate a complaint against the receiver. If you do, you can prepare an official complaint and lodge it with ASIC. If you want legal advice on your rights as a shareholder, and whether the receiver has acted illegally, you should speak to a lawyer. By pressing the “Consult a Lawyer” button, LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services. Costs for legal advice and representation will vary between providers based on experience and the scope of services.