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02 Mar 2015

Receiverships are never straightforward


5 min

One week: 3 police visits, 1 break-in and 1 sit-in protest

As the air hostess advises that all electronic devices are to be switched off, I have to cut short my phone conversation to a solicitor who has requested that I act as a receiver with a view of taking control of a business in country NSW the next day. I had my flight to Sydney to process that information and form a plan of attack. Luckily, I had one thing going for me—I was at least heading in the right direction—the business was in NSW, albeit a seven-hour drive away in the New South Wales countryside.

It's safe to say that the flight did not prepare me for the seven-day drama that ensued.

Day one
The appointment as receiver takes effect and I immediately instruct an agent to secure the premises and value the assets. My agent is ‘greeted’ by the director who decides that the best way he can possibly deal with the unraveling situation is to stay put. Literally. He get’s nice and comfortable to stage a sit-in.

Enter the local boys in blue and they convince the director to leave the premises on the fact that the locks have been changed, and that no assets will be removed until the director can speak to his lawyer.

Our security guard arrives at the premises for a weekend shift.

Day two
The director starts the day by giving our agent another tongue thrashing. So, we think keeping our security guard around is a good idea, at least for today.

A gentleman arrives to collect ‘his’ equipment allegedly purchased by him prior to the receivership. Of course it’s the same equipment that our appointor has a security over. We ask for evidence of his purchase, which isn’t with him, but we later get a call from his lawyer advising we will receive the proof of the purchase the next morning.

Day three
A quiet day for everyone concerned, director is nowhere to be seen, and no word from the alleged purchaser or their lawyer. We make a formal request to the lawyers for the purchase contract and proof of purchase.

Day four
Our agent values the equipment in the premises at $23,000. Meanwhile, the purchase documents finally arrive. The documents consist of a typed agreement with handwritten notes scrawled across it. The agreement shows that the sale price was set at $18,000 ($5,000 undervalue), and only one signatory: the seller, not the purchaser. Another sticking point on the documents was the settlement date—three days in the future. Further, it is alleged that a deposit has been paid, but of course there is no evidence of payment, and most pertinent—no consent from the secured creditor (appointor).

Security guard is still at the sentinel.

We tell the purchaser’s lawyer that we are not completing the ‘sale’, and instruct our auctioneer to collect and store the equipment.

Day five
Given that we have determined the sale cannot proceed the purchaser’s lawyer asks for the purchase deposit back—but we are unsure how to return something that hasn’t been paid! Our auctioneer attempts to remove the equipment, but is confronted with two physical obstacles; the director and the ‘customer’ are again sitting in.

Boys in blue arrive and again play mediator with a resolution for our auctioneer to securely store the equipment until an agreement is reached.

Day six
Two sets of removalists arrive (ours and the purchaser’s) and hold a standoff in the car park. Meanwhile, back in the premises, the locks have been changed by a newcomer to the saga—the landlord, who in the dead of night, broke through the roof to change the locks from the inside. The landlord’s ransom... $3,500...winner takes all (the equipment).

Just to make things a little more interesting, the security company refuse to provide any further security until their outstanding account of $7,000 is paid.

The auctioneer advises that while they will agree to moving the assets, they will not store it at their premises due to their dealings with the purchaser.

A competitor of the business, materialises out of thin air, waving a purchase agreement for a vehicle, on a cash basis, to which no evidence is provided in support of the payment.

Our appointer (secured creditor) pays the landlord’s ransom and the security costs to eliminate those complications.

The boys in blue tell the purchaser that if he turns up at the premises again, his next stop will be the watch house.

Day seven
All the wildcards have landed, and we reach a conclusion to a convoluted week:

  • Equipment sold to our appointor, so that they could fit out another franchise.
  • Car sold at auction.
  • Alleged purchasers of equipment and car still threatening to sue for the money they can’t prove they paid.
  • Appointor couldn’t be happier with the result.

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