How to get a business out of receivership
A receiver is appointed by a secured creditor to recover what it is owed. Once that debt and the receiver's costs are paid in full, the receiver has nothing left to do and steps aside. If there is enough equity in real estate, HomeSec can lend against it, pay the receiver or creditor direct at settlement, and give you six months with no repayments.
See if you qualify in sixty seconds. No credit check to apply, no financials, no payments for the first six months. That's the HomeSec Advantage.
See if you qualifyWhat receivership actually is
When a business borrows against a general security agreement or a mortgage, the lender usually gets the right to appoint a receiver if the loan goes into default. The receiver's job is narrow: recover what that one secured creditor is owed. ASIC's own guide puts it plainly — the receiver's principal duty is to the secured creditor, and control of the secured assets, which often includes the business itself, is taken away from the directors.
A receiver can keep the business trading in order to sell it, or sell the assets. They must take reasonable care to sell for market value, or the best price reasonably obtainable — but "the best price reasonably obtainable" in a forced sale is rarely the price you would have got. And the receiver's fees are paid from the assets before anything comes back to you.
How a receivership ends — and the part most owners are never told
A receivership ends when the secured creditor has been repaid and the receiver's own costs are covered. Usually that happens by the receiver selling things. But it does not have to. If the debt owed to the secured creditor, and the receiver's fees and costs to date, are paid in full from another source, the receiver has nothing left to recover and steps aside, and control goes back to the directors.
That other source can be a loan secured against real estate. It is something HomeSec has done for businesses since 2004, and it is the reason this page exists: very few business owners know it is an option until it is too late to use it.
How we do it
- Call us early. Tell us who appointed the receiver, roughly what is owed, and what real estate there is — the company's, yours or another owner's who agrees to offer it.
- Get the payout figure. The receiver or the creditor's solicitor will give you the amount needed to discharge the debt and their costs. We can help you ask for it.
- Approval. A Lending Manager assesses the property, the purpose and the way out. No credit score minimum, no financials, no valuers.
- Settlement — paid direct. We register our mortgage, first or second, and pay the receiver or secured creditor directly. The receiver steps aside and the business is back in your hands.
- Six months to breathe. HomeSec loans can come with no repayments for up to the first six months, so the business can recover instead of servicing a new debt from day one.
- The way out. Typically, once the business has steadied, you refinance your first mortgage with a bank, and that refinance pays HomeSec out at the same time. Some clients sell a property instead.
The payout figure includes the receiver's fees, and those grow every week the receivership runs. A receiver selling assets is also a receiver making the decision for you. The earlier we see the file, the more of the business there is to hand back. Funding is possible in as little as 24 hours from a clean, complete scenario.
Not in receivership yet — but the bank is talking about it
The cheapest receivership is the one that never starts. If the bank has called in the facility, issued a demand or a default notice, or told you it will not renew, the time to refinance is now, while you are still in control and the payout does not include a receiver's costs. See the bank has called in my business loan and the bank will not refinance.
What we need to see
- Enough equity in real estate to cover the payout. We lend up to 80% of a residential property's value or 70% of a commercial one, less what is already owing, from $20,000 to $5,000,000.
- A business purpose — and paying out a business's secured creditor is one.
- A realistic way out — usually a refinance once the business has steadied, or a sale.
Bad credit, defaults, judgments and ATO debts are usually okay with us. A business in receivership rarely has a clean file, and we do not expect one — more on bad credit business loans.
When this does not work
It is worth being straight about it. If there is not enough equity in real estate to cover the payout, a HomeSec loan cannot end the receivership. If the company is also in liquidation, a liquidator controls it for all creditors, and that is a different and much harder process to reverse. And if the company owes far more than the secured debt, paying out one creditor may not solve the problem. In each of those cases, speak to a registered liquidator or an insolvency lawyer first. We lend money; we are not insolvency advisers.
General information about receivership in Australia, drawn from ASIC's published guidance; not legal or financial advice. Every loan is subject to assessment and approval.
Questions about getting out of receivership
Can you get a company out of receivership?
Whose property can be used?
What does it cost to get out of receivership?
The bank has not appointed a receiver yet, but it is threatening to. What should I do?
The company is in liquidation, not receivership. Can you help?
Do I need to make repayments straight away?
Other situations we fund when a business is under pressure.
Tell us who appointed the receiver and what property there is. We will tell you on the call whether we can pay them out. 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time.
See if you qualify in sixty seconds
Three short questions, no credit check to apply and no financial statements. A Lending Manager reads it and calls you back with a real answer — not a call centre, not an algorithm.
That's the HomeSec Advantage.
Reviewed by Paul Stone, Joint Chief Executive