RECEIVERSHIP

RECEIVERSHIP

s. 182 - Interpretation of Sub-Part III - Receivers and Managers
1. “chargee” means the person entitled to the benefit of an instrument
2. “chargor” means a company in respect of whose property a receiver is or may be appointed
3. “creditor” includes a person to whom the chargor owes a debt or is under a liability, whether present or future, certain or contingent, and whether an ascertained debt or liability or a liability in damages
4. “failure to comply”, in relation to a receiver, means a failure by a receiver to comply with a relevant duty arising
  1. under the instrument or the order of the Court by or under which the receiver was appointed
  2. under this or any other enactment, rule of law or Rule of Court
  3. under any other order or direction of the Court
5. “manager” means a person appointed under this Sub-Part to carry on a company’s business and dispose of its undertaking
6. “mortgage” includes a charge on property for securing money or money’s worth
7. “mortgagee” includes a person from time to time deriving title under the original mortgage
  1. but does not include a receiver
8. “mortgagee in possession” means a mortgagee who personally or as or through an agent exercises a power to
  1. receive income from mortgaged property
  2. enter into possession or assume control of mortgaged property
  3. sell or otherwise alienate mortgaged property
9. “preferential claim” means a claim which is a preferential debt in accordance with the Fourth Schedule except for the payment of the fees and expenses properly incurred by the liquidator in carrying out his functions and duties
10. “property” includes
  1. an interest or right in property
  2. a debt
11. ”receiver” means a person appointed in terms of section 183 to take possession and control of the property in receivership and deal with it as directed in the instrument of appointment, and unless otherwise stated covers a person appointed as a receiver and manager;
Receivers and Managers
1. The Receiver’s primary function is to take possession of the secure assets and to manage and realise them in order to benefit the appointer.
2. Definition in Blanchard, The Law of Company Receiverships in Australia and New Zealan (Butterworths, 1982)
  1. “By realisation or profitable management of the assets of the debtor company to produce cash and to apply it in and towards the payment of preferential creditors, meeting his own expenses and remuneration, paying off any security ranking ahead of the debenture and repaying the amount owning under the debenture. Thereafter he must account to the company for any surplus funds”
Mode of Appointment
1. s. 183(2) - An instrument that creates a charge in respect of property and undertaking of a company may confer on the chargee the power to appoint a receiver or a receiver and manager of the property and undertaking or of that part which is secured by the charge.
2. s. 185(1) - Where an instrument confers on the chargee the power to appoint a receiver or a receiver and manager, the chargee may appoint a receiver or a receiver and manager by an instrument in writing signed by him or on his behalf.
3. s. 186 - Appointment of receiver by Court
  1. The Court may appoint a receiver or a receiver and manager on the application of a chargee or of any other interested person and on notice to the company, where the Court is satisfied that
    1. the company has failed to pay a debt due to the chargee or has otherwise failed to meet any obligation to the chargee, of that any principal money borrowed by the company or interest is in arrears for more than 21 days
    2. the company proposes to sell or otherwise dispose of the secured property in breach of the terms of any instrument creating the security or charge
    3. it is necessary to do so to ensure the preservation of the secured property for the benefit of the chargee
  2. A receiver or receiver and manager may be appointed
    1. notwithstanding any other enactment
    2. whether or not the property in respect of which the receiver is appointed includes immovable property
  3. A person appointed by the Court as a receiver shall be appointed receiver and manager unless the Court directs that the person is to be appointed only as a receiver.
  4. In the case of a floating charge, where the application for the appointment of a receiver is brought by the chargee, the application may be accompanied by a notice for the crystallisation of the charge under Article 2202-40 of the Code Civil Mauricien and the Court, when determining whether a receiver shall be appointed, shall also hear any objection raised by the company to the crystallisation of the charge and determine whether the crystallisation of the charge should be set aside.
s. 195 -Validity of act of receiver
1. no act of a receiver is invalid merely because the receiver was not validly appointed or is disqualified from acting as a receiver or is not authorised to do the act.
2. No transaction entered into by a receiver is invalid merely because the receiver was not validly appointed or is not authorised to enter into the transaction unless the person dealing with the receiver has, or ought to have, by reason of his relationship with the receiver or the property by whom the receiver was appointed, knowledge that the receiver was not validly appointed or did not have authority to enter into the transaction.
s. 184 - Qualifications of receiver
1. no person may be appointed as a receiver who
  1. is not qualified to be a liquidator
  2. is a creditor of the chargor
  3. is or has within the period of 2 years immediately preceding the commencement of the receivership been a director, officer or auditor of the chargee of the property in receivership or of any corporation which is a related company of the chargee
  4. has or has within the period of 2 years immediately preceding the commencement of the receivership had an interest, direct or indirect, in a share issued by the chargor
  5. is a person in respect of whom an order for his removal as a liquidator has been made or is prohibited from acting as a liquidator
  6. is a person who is disqualified from acting as a receiver by the instrument that confers the power to appoint a receiver
  7. is not qualified to be appointed to be an Insolvency Practitioner
  8. Unless the Court orders otherwise
  9. A body corporate shall not be appointed or act as a receiver.
s. 190 - Powers of receiver
1. the powers and authorities expressly or impliedly conferred by the instrument or the order of the Court by or under which the appointment was made.
  1. shall have and may exercise the powers set out in the Eighth Schedule.
2. exercise the receiver’s powers and authorities to the exclusion of the board of directors or chargor.
3. Two or more receivers may act jointly or severally to the extent that they have the same powers unless the instrument under which, or the order of the Court by which, they are appointed expressly provides otherwise.
4. 8th Schedule
  1. a receiver of property of a company has power to do, in Mauritius and elsewhere, all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the receiver was appointed.
  2. to enter into possession and take control of property of the company in accordance with the terms of that order or instrument
  3. to lease, let on hire or dispose of property of the company
  4. to grant options over property of the company on such conditions as the receiver thinks fit
  5. to borrow money on the security of property of the company
  6. to insure property of the company
  7. to repair, renew or enlarge property of the company
  8. to convert property of the company into money
  9. to carry on any business of the company
  10. to take on lease or on hire, or to acquire, any property necessary or convenient in connection with the carrying on of a business of the company
  11. to demand and recover, by action or otherwise, income of the property in receivership
  12. to issue receipts for income recovered
  13. to inspect at any reasonable time books or documents that relate to the property in receivership and that are in the possession or under the control of the company
  14. to change the registered office or address for service of the company
  15. to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the company
  16. to draw, accept, make and endorse a bill of exchange or promissory note
  17. to use a seal of the company
  18. to engage or discharge employees on behalf of the company
  19. to appoint a solicitor, accountant or other professionally qualified person to assist the receiver
  20. to appoint an agent to do any business that the receiver is unable to do, or that it is unreasonable to expect the receiver to do, in person
  21. where a debt or liability is owed to the company – to prove the debt or liability in a bankruptcy, insolvency or winding up and, in connection therewith, to receive dividends and to assent to a proposal for a composition or a scheme of arrangement
  22. to make or defend an application for the winding up of the company
  23. to refer to arbitration any question affecting the company
5. does not affect any rights in relation to that property of any person other than the company.
s. 197 - General duties of receiver
1. exercise his powers in good faith
2. exercise his powers in a manner which he believes on reasonable grounds to be in the interests of the person in whose interest he was appointed
  1. the chargor
  2. persons claiming, through the chargor, interests in the property in the receivership
  3. unsecured creditors of the chargor
  4. sureties who may be called upon to fulfil obligations of the chargor
  5. A receiver shall not be bound to act in accordance with the directions of the person appointing him and any such failure shall not be regarded as being in breach of the duty
3. A receiver who exercises a power of sale of property in a receivership owes a duty to the chargor to obtain the best price reasonably obtainable as at the time of sale.
4. it shall not be a defence to proceedings against a receiver for a breach of the duty that the receiver was acting as the chargor’s agent or under a power of attorney from the chargor; and
5. a receiver shall not be entitled to compensation or indemnity from the property in receivership or the chargor in respect of any liability incurred by the receiver arising from a breach of the duty
6. A receiver shall keep money relating to the property in receivership separate from other money received in the course of, but not relating to, the receivership and from other money held by or under the control of the receiver
7. A receiver shall at all times keep accounting records in the English or French language, that correctly record and explain all receipts, expenditure and other transactions relating to the property in receivership
  1. The accounting records shall be retained by the receiver for not less than 6 years after the receivership ends
    1. The receiver shall, in claiming remuneration, be entitled to include the reasonable costs of storage of records required to be kept
s. 185 - Appointment of receiver under instrument
1. Where an instrument confers on the chargee the power to appoint a receiver or a receiver and manager, the chargee may appoint a receiver or a receiver and manager by an instrument in writing signed by him or on his behalf.
  1. shall be the agent of the chargor, unless the instrument expressly provides otherwise.
    1. notwithstanding any other enactment
    2. whether or not the property in respect of which the receiver or receiver and manager is appointed includes immovable property
    3. may act as receiver and manager unless the instrument appointing him excludes appointment as manager
  2. two or more receivers
  3. a receiver additional to a receiver in office
  4. a receiver to succeed a receiver whose office has become vacant
s. 182 - Power to make call on shares
1. A receiver has the same powers as the directors of a company has or, if the company is in liquidation, as the directors would have if it was not in liquidation, to make calls on the shareholders of the company in respect of uncalled capital that is charged under the instrument by or under which the receiver was appointed and charge interest on, and enforce payment of calls.
  1. “uncalled capital” includes any payment in respect of the issue of shares or under the constitution of the company.
  2. deemed to be a proper call or power made or exercised by directors of the company.
194 - Obligations of company and directors
1. within 7 days make available to the receiver all books, documents and information relating to the property in receivership in the company’s possession or under the company’s control
  1. may verify by affidavit that the books, documents and information are complete and correct
2. make out and submit a statement as to the affairs of the company
3. give the receiver such assistance as he may reasonably require
4. where the company has a seal, make the seal available for use by the receiver
5. The statement as to the affairs of a company
  1. the particulars of the company’s assets
  2. debts and liabilities
  3. the names and addresses of its creditors
    1. charges held by them respectively
    2. the dates when the charges were respectively created
  4. include a statement confirming that payment for PAYE, NPF, Training Levy, Workfare Programme Fund have been paid on the due dates
  5. in the form of an affidavit by a director and a secretary of the company
s. 198 - First report by receiver
1. prepare a report on the state of the affairs with respect to the property in receivership including - not later than 2 months
2. particulars of the assets comprising the property in receivership
3. particulars of the debts and liabilities to be satisfied from the property in receivership
4. the names and addresses of the creditors with an interest in the property in receivership
5. particulars of any encumbrance over the property in receivership held by any creditor including the date on which it was created
6. particulars of any default by the chargor in making relevant information available
7. such other information as may be prescribed
8. details of the events leading up to the appointment of the receiver, so far as the receiver is aware of them
9. details of property disposed of and any proposals for the disposal of property in receivership
10. details of amounts owing, as at the date of appointment, to creditors of the chargor having preferential claims
11. may omit from the report details of any proposals for disposal of the property in receivership where he considers that their inclusion would materially prejudice the exercise of his functions.
s. 199 - Further report by receiver
1. a receiver or a person who was a receiver at the end of the receivership, as the case may be, shall prepare a further report summarising the state of affairs with respect to the property in receivership as at those dates, and the conduct of the receivership, including all amounts received and paid, during the periods to which the report relates.
  1. Not later than 2 months after
    1. the end of each period of 6 months after his appointment as receiver
    2. the date on which the receivership ends
s. 200 -Extension of time for preparing reports
1. may be extended by the Court, where the person was appointed a receiver by the Court
2. may be extended by the Registrar of Companies, where the person was appointed a receiver by or under an instrument
s. 201 - Persons entitled to receive reports
1. A copy of every report prepared under s. 198 or 199 shall be sent by the person required to prepare it to the chargor and the chargor shall as soon as possible cause public notice to be given that a report has been prepared and is available for inspection
2. A person appointed as a receiver by the Court shall file a copy of every report prepared under section 198 or 199 in the office of the Court
s. 202 - Duty to notify breaches of Acts
1. A receiver who considers that the company or any director or officer of the company has committed an offence against the Companies Act or the Securities Act shall forthwith report that fact to the Registrar of Companies and the Director.
s. Preferential claims

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