However this is not always the case because sometimes the receiver actually tries to trade out of the receivership. If you were supplying the company that went into receivership what should you do if the receiver asks you to continue the relationship?
What to do
Remember that ABC Ltd (in receivership) is not the same entity as ABC Ltd. This means that any contracts you had with ABC Ltd do not just 'roll over' but need to be renegotiated.
Remember also that a receiver is acting in the interest of the secured creditor who appointed the receiver. This is where a receiver differs from a liquidator, as a liquidator also has to take account of all creditors.
- Check that you can cancel delivery of goods or services to ABC Ltd - this should be part of your terms and conditions. You may be legally obliged to complete a contract even if you know you won't get paid for it (although this doesn't usually happen).
- Consider changing your payment terms to cash on delivery (or payment in advance if you provide services) rather than say a 30 day account.
- If delivering goods take advantage of the Personal Properties Securities Act
