What is a receiver, and how is one appointed?
The Corporations Act 2001 (Cth) calls a receiver, or anyone else controlling property to enforce a security interest, a “controller” (s 9). A receiver and manager, who also has power to manage the business, is a “managing controller”.
Most appointments are private: the lender appoints under its security agreement, often a general security deed over all assets. The receiver is usually the company’s agent but acts for the lender.
Courts can also appoint receivers. The Supreme Court of Queensland may do so in a proceeding where it is just or convenient (Civil Proceedings Act 2011 (Qld) s 12). Where an ASIC investigation or proceedings under the Act are on foot, the court can appoint a receiver to protect people owed money (s 1323(1)(h)).
ASIC data shows receiver and manager appointments in Queensland rose by almost 80% in 2025–26.
Was the receiver validly appointed?
A lender can appoint only if its security allows it. That usually requires a default and often a demand. An “on demand” debt must be given a reasonable time to pay. That means time for the mechanics of payment, not time to find new finance. The High Court set this test in Bunbury Foods Pty Ltd v National Bank of Australasia Ltd (1984) 153 CLR 491. The Federal Court applied it in Parras Holdings Pty Ltd v Commonwealth Bank of Australia [1998] FCA 682.
Check the facility, security, default notice and appointment. If there is doubt, the receiver, the company or a creditor can ask the court to declare whether the appointment was valid (s 418A).
Ipso facto stay. This applies where a managing controller is appointed over all or substantially all of the company’s property. Counterparties then cannot enforce contractual rights merely because of the appointment or the company’s financial position (s 434J). The stay covers contracts entered into on or after 1 July 2018. It does not cover contracts made after the appointment, rights the receiver consents to in writing, or excluded rights (s 434J(5)). Nor does it stop termination for actual non-performance. The Federal Court held this for the equivalent administration stay in Rathner, in the matter of Citius Property Pty Ltd [2023] FCA 26.
Voluntary administration. A voluntary administration normally stops secured parties enforcing without the administrator’s written consent or the court’s leave (s 440B). A lender with security over all or substantially all property is the exception. It can enforce within the “decision period”, which ends 13 business days after it receives notice of the appointment (ss 9, 441A). Enforcement begun before the administration can continue (s 441B), subject to court limits (s 441D).
What powers and duties does a receiver have?
Subject to the security or court order, a receiver can take possession, trade, borrow, sell or lease assets, employ staff and sue (s 420). If the company is in liquidation, the receiver needs the liquidator’s written approval or the court’s leave to trade (s 420C).
Duty when selling. A receiver must take all reasonable care to sell for at least market value, or the best price reasonably obtainable (s 420A). Courts assess the process as a whole, not the price with hindsight. There is no fixed checklist (Boz One Pty Ltd v McLellan [2015] VSCA 68). Advertising may be unnecessary where it would be futile (Diddams v Commonwealth Bank of Australia [1998] FCA 839).
Liability and indemnity. Receivers are personally liable for debts they incur for services, goods, and property hired, leased, used or occupied (s 419). After seven days they are also liable for rent on premises the company occupies. They can avoid this by giving notice within that time that they will not use the property (s 419A). Section 419 preserves the receiver’s rights against the company, and the security document usually gives an indemnity out of the secured assets.
Accounts and reporting. A managing controller must keep a separate bank account and records (s 421). They must lodge a report on the company’s affairs with ASIC within two months (s 421A). Receivers must report suspected offences by officers to ASIC as soon as practicable (s 422). Since the Insolvency Law Reform Act 2016 (Cth), controllers also lodge annual and end-of-control returns (ss 422A, 422B).
Employees first. Under a circulating security interest, certain priority debts, including employee entitlements, come out of circulating assets before the lender (s 433). Section 433 applies only if the company was not already in liquidation when the receiver was appointed. If it was, the liquidator applies the same employee priority over circulating assets under s 561.
What can directors do during receivership?
Directors lose control of the secured property but stay in office. They keep residual powers that do not prejudice the receiver’s legitimate interests in realising the assets. The Supreme Court of Queensland confirmed this in Capital Globe Investments Pty Ltd v Parker Investments Australia Pty Ltd [2011] QSC 31. That case applied the long-standing rule in Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWR 782.
Within 10 business days after the company receives notice of the appointment, directors must give the receiver a report about the company’s affairs (s 429).
Anyone can complain about a receiver to the court or ASIC. The court can inquire and order the receiver to make good any loss to the company (s 423). On the company’s application, the court can remove a receiver for misconduct (s 434A).
Directors’ best options are usually commercial: refinance, negotiate a standstill or managed sale, or appoint an administrator. Directors who gave personal guarantees should get separate advice early.
How is a receiver’s sale challenged in practice?
Section 420A disputes usually surface when the lender sues a guarantor for the shortfall. The guarantor argues the receiver sold too cheaply or too quickly.
Take a worked example. Receivers are appointed over a Brisbane manufacturing business. They obtain two valuations, appoint agents and run a six-week expression of interest campaign. The best offer is below the higher valuation, and the guarantor objects. On these facts a breach is unlikely. The receivers tested the market and documented their reasons.
Change the facts. The receivers sell the factory within a fortnight to a party introduced by the lender, with no valuation or marketing. Here the process itself invites challenge, even if the price later proves defensible.
Useful evidence includes valuations, marketing material, offers received and lender correspondence. Raise concerns in writing before contracts are exchanged.
Recent developments. No appellate court has reshaped the s 420A test since Boz One. In August 2026 the Commonwealth Government responded to the Parliamentary Joint Committee’s corporate insolvency report. It deferred broader reform to the Productivity Commission’s business dynamism inquiry, due to report by May 2027.
What should you do if a lender appoints, or is about to appoint, receivers?
- Collect the facility, security, default notices, demand and appointment documents.
- Check whether each condition for appointment was met.
- Diarise the 10 business day report on the company’s affairs (s 429).
- Explore refinancing or a negotiated exit before assets are marketed.
- Ask the receiver in writing about valuations, agents and the sale campaign.
- Lenders: confirm the default, demand and any administration timing before appointing.
How Taylor David can help
We act across Australia for directors, borrowers, guarantors, lenders, receivers and buyers. We can:
- test an appointment’s validity in the Supreme Court of Queensland or Federal Court
- negotiate refinancing, standstills and managed exits
- advise lenders and receivers on enforcement, sale processes and reporting
- defend or pursue shortfall claims against guarantors
- act for buyers in distressed acquisitions.
This work sits within our insolvency, reconstruction and turnaround and litigation practices.