Quick receiverhsip question!

Hogzy

When a receiver is taking all reasonable care to get the best price for an asset.

Is he obliged (under statute) to get an official valuation by a professional, And if so how many independant valuations is he obliged to get?

Tom Young

I don't believe this is overtly stated in the relevant acts.

EDIT: This is wrong.

dermot_sheehan

A receiver is under a fiduciary duty to manage the assets to the best of his ability and if selling them to get the best price.

By getting independent valuations for the assets he is effectively covering himself from being sued for breach of trust by showing that he got as close to the market price as he could.

Although a receiver is not obliged to do this, it is good practice.

Tom Young

gabhain7 wrote: »

A receiver is under a fiduciary duty to manage the assets to the best of his ability and if selling them to get the best price.

By getting independent valuations for the assets he is effectively covering himself from being sued for breach of trust by showing that he got as close to the market price as he could.

Although a receiver is not obliged to do this, it is good practice.

Yup, do you know of any cases where an Examiner has actually been sued for same said breach of trust? I was looking for examples of this of late and didn't come up with any from this jurisdiction. I can only assume that this is due to the nature of the Courts approval of Examinership plans and schemes of arrangement.

Tom

Tom Young

gabhain7 wrote: »

A receiver is under a fiduciary duty to manage the assets to the best of his ability and if selling them to get the best price.

In relation to the OPs post, the best price may not actually be at market or best value if it is in the best interests of the company to dispense with an asset. In addition, I'd assume that the fiduciary duty would extend to getting valuation assistance, but again, if a 'fire sale' was required in order to maintain the company I know of a few examples where this has happened.

Tom Young

Duty to exercise care in disposing of assets of company

Established law that Receiver owes a duty to take reasonable care to companies to obtain best price possible for assets of company.
Originally enshrined in case law, now by statute S.316A(1) CA 1963, as inserted by s. 172 CA 1990.

It is not a defence to plead that Receiver was acting as agent of company or pursuant to power of attorney.

Further to s.318A(2)(b) an Receiver who breaches this duty of care is not entitled to be compensated or indemnified by company for any liability that may be incurred.

Burden of proof

Receiver has burden of proving that best price possible for assets was obtained.

Edenfell Holding Ltd – Laffoy J placed a positive onus on R to show that he considered whether transac, taking into account all significant commercial elements, resulted in co obtaining best price reasonably sought at time of sale.

Operative date for test

When considering whether or not best price possible obtained, test must be applied at date of contract – Kenny J in Casey v Intercontinental Bank

Standard to be applied

Standard is higher than simply acting in good faith

Holohan v Friends Provident – held that Receiver should have tried to sell property with vacant possession, as he would have obtained a higher price for the building. Receiver had breached his duty of care as he had failed to consider alternatives.

Advice and representation

Receiver should take advice of experts of the most efficient and valuable method of sale.

Lambert Jones Estate Ltd v Donnelly, 1982 – Receiver rejected advice as would involve costly and protracted planning apps while interest mounting against co. Court held had not breached Duty of Care.

**Seems I was wrong** :cool:

dermot_sheehan

Tom Young wrote: »

Duty to exercise care in disposing of assets of company

Established law that Receiver owes a duty to take reasonable care to companies to obtain best price possible for assets of company.
Originally enshrined in case law, now by statute S.316A(1) CA 1963, as inserted by s. 172 CA 1990.

It is not a defence to plead that Receiver was acting as agent of company or pursuant to power of attorney.

Further to s.318A(2)(b) an Receiver who breaches this duty of care is not entitled to be compensated or indemnified by company for any liability that may be incurred.

Burden of proof

Receiver has burden of proving that best price possible for assets was obtained.

Edenfell Holding Ltd – Laffoy J placed a positive onus on R to show that he considered whether transac, taking into account all significant commercial elements, resulted in co obtaining best price reasonably sought at time of sale.

Operative date for test

When considering whether or not best price possible obtained, test must be applied at date of contract – Kenny J in Casey v Intercontinental Bank

Standard to be applied

Standard is higher than simply acting in good faith

Holohan v Friends Provident – held that Receiver should have tried to sell property with vacant possession, as he would have obtained a higher price for the building. Receiver had breached his duty of care as he had failed to consider alternatives.

Advice and representation

Receiver should take advice of experts of the most efficient and valuable method of sale.

Lambert Jones Estate Ltd v Donnelly, 1982 – Receiver rejected advice as would involve costly and protracted planning apps while interest mounting against co. Court held had not breached Duty of Care.

**Seems I was wrong** :cool:

I wasn't aware of these statutory provisions governing receivers. I just assumed they owed fiduciary duties to the company and it's creditors to achieve the best price.

Tom Young

gabhain7 wrote: »

I wasn't aware of these statutory provisions governing receivers. I just assumed they owed fiduciary duties to the company and it's creditors to achieve the best price.

When I read the OP I was automatically thinking Examiner rather than Receiver, these provisions remain in force to the best of my (notes) knowledge.

My question on Examiners stands in re. Breach of trust. Any cases?

Hogzy

Cheers lads, i was just clearing it up for my last EVER exam for college tomorrow... WAHHOOOOOOOOOOOOOO!!!!!!!!!!!!!!!