223 Powers of a receiver

Powers of a receiver

The specific powers and duties of a receiver may vary and will depend on the reason for his/her appointment (e.g., to preserve property pending litigation, or for debenture holders, etc.). The receiver’s powers in any given case must be ascertained from and interpreted in accordance with the order under which he/she is appointed.

Administrative receivers/managers are the authorised agents of the company under the debenture and as such are authorised to enter into any sale and purchase agreement on the assets of the company with prior consent of the debenture holders.

The Court of Appeal (Kuala Lumpur) in Melantrans Sdn Bhd v Carah Enterprise Sdn Bhd (in receivership) & Anor [2000] 3 MLJ 304 held that the administrative receivers/managers are to be agents of the company and are thus absolutely free and empowered to dispose the assets of the company. Their actions bind the company in the following circumstances:

1. The memorandum and articles of the chargor company has an object clause to sell its land.

2. The articles of the company have provisions in the granting of the lawful power of attorney in favour of the receivers/managers.

3. The chargor company is not wound up.

4. The debenture empowers a receiver and manager appointed under the debenture to act as agent to enable the exercise of the powers accorded to the receiver and manager.

5. The debenture contains a validly constituted power of attorney clause, irrevocably appointing the receiver and manager as the lawful attorney of the chargor company.

6. Such sale is not proceeded by the chargee under its foreclosure proceedings but the chargor proceeds with the sale with consenting parties.

7. It is the borrower company that has not been wound up that is asking for the sale.


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