Modern approach to receivership orders
Posted: 10th June 2013
In a telling example of the modern, less restrictive, approach to debt recovery, a bank seeking to execute a judgment debt in excess of $3.6 billion has been granted a variation to a receivership order enabling the sale of three ‘sumptuous’ homes which were found to be beneficially owned by the debtor.
Following judgment being entered against the debtor, a judge had found to the criminal standard that the properties – including a London house valued at up to £15 million and a Surrey estate worth up to £25 million – belonged to the debtor notwithstanding that legal title to them was held by corporate entities.
In circumstances where receivers had been appointed in respect of the properties and had incurred substantial maintenance costs over an extended period, the bank, as principal creditor, applied to the court for an extension to the receivership order to include a power of sale.
Granting the amendment, the court noted the general power under section 37.1 of the Senior Courts Act 1981 to take ‘just and convenient’ steps to protect creditors’ interests and the specific power contained within section 37.4 to appoint a receiver by way of equitable execution.
The bank successfully argued that the law relating to the exercise of the court’s powers of equitable execution had developed over time and were no longer subject to the restrictions suggested by some of the older case law. It was submitted that the receivers already enjoyed management powers in respect of the properties and, in circumstances where they remained accountable to the court, granting them a power of sale would entail no loss of judicial control over the process.
An interim charging order in respect of the properties was already in place and the receivers had made it clear that no attempt would be made to sell the properties until a final charging order had been granted.