At Bransgroves Lawyers, we specialise in representing mortgagees in fast and cost-effective enforcement actions. Our experience has shown that appointing receivers often results in high fees with limited added value. In straightforward mortgage recovery scenarios we have found that communication between lawyers & receivers frequently leads to double handling and a slowing down of the process.
Further we have observed that the work undertaken by receivers, administrators and liquidators tends to expand to consume all available surplus. This effectively increases the loan-to-value ratio (LVR) towards 100% and often beyond. This tendency (to generate unnecessary “make work,”) will often result in a shortfall to the lender.
As such, our firm policy is to advise lenders against appointing receivers wherever possible. We recommend it only in circumstances where it is unavoidable and demonstrably beneficial to the lender’s interests, such as:
- Going concern businesses: Where the mortgaged property includes an operational business that requires ongoing management to preserve value during the enforcement process.
- Chattel auctions: In situations involving significant personal property or chattels that necessitate specialised auction processes to maximise recovery.
- Complex coordination: When the property requires extensive work, such as major repairs, tenant management, or complex multi-party coordination, that exceeds the capabilities of a real estate agent.
In all other cases, we prioritise simpler, lower-cost alternatives, such as direct possession and sale through a carefully chosen and supervised real estate agent, managed by ourselves, to ensure swift resolution and minimal expense for our lender client. This approach aligns with our commitment to lender-focused strategies that optimise outcomes in mortgage enforcement.
It should also be noted that solutions that optimise the speed and efficiency in security realisation also, by definition, provide maximum benefit to the borrower by maximising the surplus available to be returned to them.
For an example of what receivers get up to see Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347 (10 April 2024)
