C. Method of Appointment

• Author: Roderick J. Wood
• Profession: Faculty of Law. University of Alberta
• Pages: 479-481

Contenidos

• 1) Private Appointment.
• 2) Court Appointment.

Page 479

1) Private Appointment

The security agreement under which a debtor grants a security interest in all of the debtor’s assets to a secured party will typically provide that the secured creditor has the power to appoint and remove a receiver upon the debtor’s default. The security agreement will usually set out the powers of the receiver. In most cases, the receiver is given the power to carry on the business of the debtor. If the security agreement merely provides for the appointment of a receiver and does not give the receiver the power to manage the business, the receiver will have only the power to receive the income from the property, to pay the liabilities connected with the property, and to realize the security interest.³⁰In order to operate the business, the receiver must be given the power to manage the business.

In the event of a default by the debtor, the secured creditor may choose to initiate the receivership by appointing a receiver. This is typically done through a letter of appointment. The receiver will then notify the debtor of the appointment and take possession and control of the business. However, the secured creditor is not compelled to enforce its security through the appointment of a receiver. It may choose instead to enforce its security through the seizure or sale of the collateral or through some other enforcement remedy available to it.

2) Court Appointment

Instead of appointing a receiver pursuant to a power conferred in a security agreement, a secured creditor may apply to a court for the appointment of a receiver. A secured creditor may also apply to court to have a receiver who has been privately appointed converted into a court-appointed receiver. One of the complicating features in the present state of the law is that there are several different statutes that provide for the court appointment of a receiver, and the secured creditor must decide to bring the application pursuant to one or more of these statutes. For example, the Alberta template receivership order³¹

Page 480

provides for the court appointment of a receiver under potentially four different statutes: namely, the Judicature Act,³²the Business Corporations Act,³³the Personal Property Security Act,³⁴and the BIA.

Prior to the 2005/2007 amendments to the BIA, the practice was to seek a concurrent appointment of an interim receiver under the BIA and under one or more of the...