Once a company is put into Recevership the previous owners are out of the picture and the company is now owned by the creditors. But it is still a going concern and doing business - the employees (or those that remain) still turn up to work and life goes on.
Meanwhile, the receiver is trying to sell the business but with no debt in place. If he is successful, what is left after his very generous fees is distributed to the shareholders (not much - just enough to keep the people who appointed him happy so they give him the next job too). And to add insult to injury, this payout, typically 5p in the pound three years later, is referred to as a "dividend"
Eventually, if he cannot sell the business and it is losing money he will put it into liquidation. Quite what happens if it is profitable but unsaleable I am not sure - but one thing I do know is that the Receiver will not be suffering hardship.
A few years back OPEC thought they would put the American shale oil producers out of business by drastically flooding the world with cheap oil. They succeeded in that objective but in one of the biggest mis-calculations since the Germans invaded Russia in the Winter while wearing swimming trunks, they failed to understand that the huge debts of the shale producers were irrelevant because receivership would wipe out the debts and the shale producers would bounce back twice as strongly because they were now totally free of debt but under different ownership. And that is exactly what happened.
Dumb or what?
Bob Cory
Modified on 15/09/2019 at 08:59:47 by ℗ Bob Cory