It is understood that once the company’s directors will gain no advantage or remedies after receivership process is initiated. They would have lost all control over the assets during this time period. It is usual practice to invoke liquidation and dissolution of the company once these processes have been invoked. This was what actually happened in Dick Smith Company. During the process of administration usually there is control given to experienced insolvency practitioner. They do not spend times to develop a company but rather develop a plan of action to liquidate the assets. These options are then investigated and consider during the prepuce administration sale. There is consideration to the invoice or other forms of financing.
In the case of Dick Smith, the secured creditors started to threaten the company to appoint a receiver. Usually at this point the companies then try to salvage the situate by discussing with a licensed insolvency practitioner. This is to control the issues but this was not possible in the receivership process of the company (Low, 2016). The receivers and the managers have started to take control over the assets and called expression of interest to close the company. Owing to the appointment of the administrators of the company the company was further downgraded and there was a $60 million inventory write-off which made the company shares sell below as 20¢ last month. The shares were traded down to 84%. This numbers were drawn based on the fact that that the investors of company paid $2.20 to the private equity firm Anchorage Capital when it floated the company shared in December 2013.
On February 25the the administrators stated that there was no sale process of acceptable offers for the group of company or for it to function as a standalone business. There offers were low than that liquidation process or had a number of stipulated unacceptable conditions. Hence, it was recommended to close the company.
Receivership was the process initiated in which a creditor in these cases the banks appoints a receiver to seize control over one or more aspect Dick Smith assets or properties that are specifically mentioned in a secured loan agreement.
Ferrier Hodgson was appointed as receivership to control the aspects of the firm ensure that there is adequate funding to support the business. Receivership of the company ends when the receiver has completed all duties, sold assets to replace loans. In this case unless external administrator is appointed full ownership goes back to the directors of the company.