When a secured lender appoints a receiver, you remain a director, but you lose control of the assets the receiver takes over. Your statutory duties continue, and you must report to the receiver within 10 business days. Act quickly on three fronts: the report, the validity of the appointment and any personal guarantee.

Who does the receiver work for?

The receiver works mainly for the lender that appointed them. As ASIC puts it, “the receiver’s principal duty is to the secured creditor”. Their task is to realise the secured assets and repay that debt. They need not pay unsecured creditors’ pre-appointment debts.

A receiver and manager can also trade, sell assets, employ staff and sue (Corporations Act 2001 (Cth) s 420). Our receivership page explains these powers in detail.

Am I still a director?

Yes. Directors stay in office, but their powers depend on the receiver’s powers and the assets covered. Where the security covers all assets, the receiver effectively controls the company.

Directors keep residual powers that do not prejudice the receiver’s 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. Those powers include refinancing, negotiating with the lender and appointing a voluntary administrator.

Your directors’ duties also continue, including care and diligence and good faith (ss 180 and 181).

What must I give the receiver?

The receiver must serve notice of the appointment on the company. Within 10 business days after the company receives it, the directors must give the receiver a report about the company’s affairs (s 429). ASIC calls this the report on company activities and property, or ROCAP.

For special reasons, the receiver or the court can extend the time. Ask in writing before the deadline passes. The receiver can also require further reports (s 430).

ASIC expects directors to hand over company property and books, say where other records are, and meet the receiver as reasonably required. Do not obstruct the receiver.

Can I still run the business?

Not the assets the receiver controls. A receiver and manager decides whether to trade on, sell as a going concern or close.

Employment does not end automatically. Where the security covers circulating assets, certain employee entitlements are paid from them before the lender (s 433).

Suppliers and customers generally cannot end contracts merely because of the appointment. This stay applies where the receiver and manager controls all or substantially all of the property (s 434J).

Was the receiver validly appointed?

A lender can appoint only if its security allows it. That usually requires a default, and often a demand. A debt payable on demand must be given a reasonable time to pay. That means time to arrange payment, not to find a new lender.

The company, the receiver or a creditor can ask the court to declare whether an appointment is valid (s 418A). In Page v Conneely, in the matter of Shyzi Pty Ltd (Final relief) [2026] FCA 294, the Federal Court upheld two appointments. It declared a third, made under a “purported” general security agreement, “not validly made and … of no legal effect”.

Can the receiver sell the assets cheaply?

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: valuations, marketing, timing and how offers were handled. A low price alone does not prove a breach. Raise concerns in writing before contracts are exchanged.

What happens to my personal guarantee?

Expect the lender to call on it. Receivership does not stop a lender enforcing a guarantee. The temporary protection for directors’ guarantees applies in voluntary administration (s 440J), not receivership. A poor sale increases the shortfall claimed, so s 420A matters to guarantors. Get separate advice on personal guarantees early.

How is this different from administration or liquidation?

A receiver enforces one lender’s security. An administrator controls the whole company to decide its future for all creditors. A liquidator winds it up and investigates the directors. Receivership can run alongside either.

Could I be personally liable later?

Yes, if the company is later wound up. A liquidator can pursue directors for insolvent trading where debts were incurred while the company was insolvent (ss 588G and 588M). Receivers must also report suspected offences by officers to ASIC (s 422).

Unpaid PAYG withholding, GST or super guarantee charge can also bring a director penalty notice. A receivership does not remit the penalty. Only payment, administration, small business restructuring or winding up within 21 days can, and only before lockdown.

What directors should do now

  • Collect the facility, security, default notices, demand and appointment documents.
  • Diarise the 10 business day report, and seek any extension early.
  • Hand over company property, books and records you hold.
  • Get advice on validity and on any personal guarantee.
  • Ask the receiver in writing about valuations, agents and the sale campaign.
  • Check the company’s ATO lodgements and any director penalty notices.

What to watch

  • The sale campaign. Valuations, marketing and offers will decide any s 420A dispute.
  • A later liquidation. A liquidator will review the period before the receivers arrived.
  • Reform. In August 2026 the Government deferred broader insolvency reform to a Productivity Commission inquiry reporting by May 2027. See Insolvency reform on hold.

To discuss how these developments affect you, contact us on +61 7 3229 9800 or send us an enquiry online.

This article is general information only and is not legal advice.

Sources