How to Compare Administration and Administrative Receivership

Administration and administrative receivership are both processes where a licensed professional takes control of an insolvent company’s affairs. The critical difference is who they work for. An administrator works for all creditors. A receiver works for the lender who appointed them.

We explain this distinction because directors often encounter the term “receiver” and assume it means the same thing as an administrator. It does not.

A receiver’s primary obligation is to the secured creditor who appointed them, typically a bank. An administrator’s obligation is to achieve the best outcome for creditors as a whole. That single difference changes everything about how the process operates, who gets paid, and what happens to the business.

Quick Answer on Administration vs Receivership Compared

	Administration	Administrative Receivership
Who appoints	Directors, floating charge holder, or court	A debenture holder (secured creditor with a charge created before 15 Sept 2003)
Who they serve	All creditors (statutory duty)	The appointing secured creditor
Moratorium	Yes, automatic: creditors cannot enforce without the administrator’s consent or the court’s permission	No moratorium for other creditors
Director control	Suspended; administrator manages the company	Suspended; receiver manages the secured assets
Rescue objective	First statutory purpose is company rescue	No rescue obligation; priority is repaying the secured creditor
Availability	Any company	Generally only where the charge was created before 15 September 2003 (a few specialist financings are exceptions)
Employee protection	Staff kept on beyond 14 days have their contracts adopted. Wages for work after that are paid ahead of the administrator’s own fees	Staff kept on beyond 14 days have their contracts adopted. The receiver is personally liable for wages for work after that

What Administrative Receivership Is

Administrative receivership is an older insolvency process where a secured creditor (usually a bank) who holds a debenture covering substantially all of the company’s assets appoints a receiver to realise those assets and repay the secured debt. The receiver’s primary obligation is to the appointing creditor, not to the company or its unsecured creditors.

Since the Enterprise Act 2002, administrative receivership is generally only available where the floating charge was created before 15 September 2003. A few specialist financings, such as capital market and project finance arrangements, are exceptions. For charges created after that date, the secured creditor’s remedy is to appoint an administrator instead.

This means administrative receivership is becoming increasingly rare, but it still arises in long-standing banking relationships where pre-2003 charges remain in place.

We still see receiverships, particularly in property-heavy businesses where the original bank charge predates 2003. If your company has a pre-2003 debenture, the bank retains the right to appoint a receiver, and understanding the difference between that and administration matters because the outcomes for you, your employees, and your unsecured creditors are substantially different.

Why Administration Replaced Administrative Receivership

The Enterprise Act 2002 effectively abolished administrative receivership for new floating charges because the process was seen as serving the interests of a single secured creditor at the expense of everyone else.

Under receivership, the receiver sells assets to repay the bank. Preferential creditors, such as employees owed wages and HMRC for some taxes, are paid from floating charge assets first. Ordinary unsecured creditors receive whatever is left (usually nothing), and the company is typically wound up.

There is no obligation to attempt rescue and no moratorium to protect the business. Employees keep only basic protections: preferential status for arrears, and the receiver’s personal liability for wages once their contracts are adopted.

Administration was designed to fix these problems. The administrator must consider rescue as the first statutory purpose. The moratorium protects the business from being picked apart by individual creditors during the process.

Employees kept on for more than 14 days have their contracts adopted, and their wages for work done after that point are paid ahead of the administrator’s own fees and costs. The process serves the creditor body as a whole, not just the biggest lender.

We tell directors: if your company’s bank charge was created after 15 September 2003, administrative receivership is not available and you are dealing with administration. If the charge predates 2003, the bank can still appoint a receiver, and you need to understand that the receiver’s loyalty runs to the bank, not to you.

What Administrative Receivership Means for Directors

In receivership, your authority over the charged assets is suspended. The receiver takes control of those assets and sells them to repay the secured creditor. If the secured debt is paid in full and a surplus remains, it passes back to the company (or into liquidation for distribution to other creditors).

Unlike administration, receivership does not prevent other creditors from taking separate enforcement action. There is no moratorium. Unsecured creditors can still issue claims, obtain judgements, and petition for compulsory liquidation while the receiver is dealing with the secured assets.

In practice, a company in receivership often ends up in concurrent liquidation, with the receiver handling the secured assets and a liquidator handling everything else.

Your personal exposure in receivership is similar to any other insolvency process. The receiver must report to the Insolvency Service on the conduct of everyone who was a director in the three years before the appointment, just as an administrator or liquidator would. If the company later enters liquidation, the liquidator does not repeat that report but must pass on any new information.

LPA Receivership: The Property-Specific Variant of Receivership

LPA receivership (under the Law of Property Act 1925) is different again. An LPA receiver is appointed by a mortgage lender to manage and sell a specific property that is subject to a charge. This is not a full insolvency process. It is a property enforcement remedy. The LPA receiver has authority only over the specific property, not over the company’s entire affairs.

We see LPA receivership in cases where a company owns commercial property that has been charged to a lender. If the company defaults on the mortgage, the lender can appoint an LPA receiver to manage the property, collect rent, and sell it.

This can happen alongside liquidation. Once a company is in administration, the lender needs the administrator’s consent or the court’s permission to appoint an LPA receiver.

Administration vs Receivership: The Final Verdict

For most companies today, administration is the only option because post-2003 charges do not support administrative receivership. If your company does have a pre-2003 charge, the bank’s decision to appoint a receiver removes your choice. The receiver arrives and takes control of the secured assets regardless of your preferences.

If you are facing the prospect of receiver appointment, take advice immediately. You may be able to pre-empt the receiver by placing the company into administration yourself.

Directors can try to appoint an administrator first, but they must give the bank at least five business days’ notice. The bank can use that time to appoint its own receiver, so in practice this route usually needs the bank’s agreement. We have seen directors use this strategy to protect the business from a receiver whose sole focus would have been selling assets to repay the bank.

Company Debt’s licensed insolvency practitioners can advise on administration, receivership, and the interplay between the two. A confidential consultation will clarify your position and your options.

FAQs on Administration vs Receivership