Rescuing Insolvent Companies via Administrative Receivership - Analysis of Qualitative Survey Data

Abstract

The place of administrative receivership in UK insolvency is ambiguous. It is often cited as a corporate rescue vehicle yet remains, primarily, a legal remedy available to holders of debentures that create a floating charge. As such it is far more likely to serve the interests of one major creditor rather than creditors and stakeholders as a whole. This paper reviews qualitative survey data from a sample of medium and large sized companies undergoing administrative receivership during 1993. It tracks the outcomes of the receiverships and provides some tentative links between these and information regarding the pre and post receivership periods. The major finding of this research is of the link between lender awareness of problems and actions taken to avert crisis. Although all companies in the sample went into administrative receivership their potential for rehabilitation appears to have been improved by the efforts and actions in the pre receivership period.