A Critical Analysis Of The Duties And Liabilities Of A Receiver Under The Insolvency Act, 2011 Of Uganda

TABLE OF CONTENTS

DECLARATION ............................................................................................................................. i

APPROVAL ................................................................................................................................... ii

DEDICATION ............................................................................................................................... iii

ACKNOWLEDGEMENT ............................................................................................................. iv

TABLE OF CONTENTS ................................................................................................................ v

STATUTORY INSTRUMENTS ................................................................................................. viii

LIST OF ACRONYMS ................................................................................................................. ix

ABSTRACT .................................................................................................................................... x

CHAPTER 0 NE ............................................................................................................................ 1

INTRODUCTION ........................................................................................................................ 1

1.0 GENERAL INTRODUCTION ................................................................................................. 1

1.1 Background of the Study .................................................................................................... ~ ...... 1

1.2 Statement of the Prob1em ........................................................................................................... 3

1.3 General Objective of the Study ................................................................................................. .4

1.4 Specific Objectives ................................................................................................................... .4

1.5 Scope of the Study .................................................................................................................... .4

1.6 Significance of the Study .......................................................................................................... .4

1.7 Methodology .............................................................................................................................. 5

1.8 Literature review ........................................................................................................................ 5

1.9 Chapterization ............................................................................................................................ 7

1.10 Conclusion ........................................................................................................................ : ...... 8

CHAPTER TW0: .......................................................................................................................... 9

APPOINTMENT OF RECEIVER AND ITS EFFECT ON THE DEBTOR .......................... 9

2.0 Introduction ................................................................................................................................ 9

2.1 Appointment of receivers .......................................................................................................... 9

2.2 Effects of the duties of a receiver. ........................................................................................... 11

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2.3 Effect on the company ............................................................................................................. 11

2.4 Effect on the director ............................................................................................................... 11

2.5 Effect on the employees ........................................................................................................... 13

2.6 Effect on the contracts ............................................................................................................. 14

2. ?Effect on the debentnres ........................................................................................................... 15

2.8 Preliminaries to the Appointment of Receiver. ....................................................................... 16

2.8.1Inability to pay debts ........................................................................................................ < •••• 16

2.9 Qualifications of receiver as provided under the Act. ............................................................. 17

2.10 Completion of Receivership and its impact in the winding up of company .......................... 18

2.11 Conclusion ............................................................................................................................. 19

CHAPTER THREE: ................................................................................................................... 20

ANALYSIS ON THE DUTIES AND LIABILITIES OF A RECEIVER ............................... 20

CHAPTER FOUR: ...................................................................................................................... 22

DUTIES AND LIABILITIES OF RECEIVER ........................................................................ 22

4.0 INTRODUCTION ................................................................................................................... 22

4.1 The roles of a receiver ............................................................................................................. 22

4.1.1 The liability of the receiver under lA and the MA ............................................................... 27

4.1.2How to avoid liability ............................................................................................................ 29

4.1.3 Conclusion ............................................................................................................................ 30

CHAPTER FIVE: ........................................................................................................................ 31

CONCLUSION AND RECOMMENDATIONS ....................................................................... 31

5.11NTRODUCTION ................................................................................................................... 31

5.2 RECOMMENDATIONS ......................................................................................................... 31

5.2.1 Regulation of receivers ......................................................................................................... 31

Receivership seen as a means of enhancing growth ...................................................................... 32

5.2.2 Receivership should looked at as a solution to inability to pay debts .................................. 32

5.2.3 Legal training of insolvency practitioners ............................................................................ 33

5.2.4 Promote public awareness .................................................................................................... 33

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5.2.5 Specialization of laws of receivership .................................................................................. 33

5.2.6 Personal liability of receiver ................................................................................................. 34

5.2.8 Improve on Jurispmdence .................................................................................................... .34

5.10 Provide rules for licensing of insolvency practitioners ........................................................ .34

5.11 An insolvency Committee should be set up ......................................................................... .34

5.12 Professional bodies should also take part in producing competent practitioners .................. 36

5.13 Conclusion ............................................................................................................................. 36

BIBLIOGRAPHY ........................................................................................................................ 37

ABSTRACT

It is increasingly clear that receivers play an important role in case of insolvency, in relation to

prope1iy over receivership, to debtor, guarantor, all persons in whose interests they are appointed

and third parties, however much as Insolvency and Mortgage Act sets out the liabilities of ~ct, as

it is in practice today, stake holders under the Act lack enough knowledge as to the duties and

liabilities of receivers, some tend to confuse them with those of tmstees thus affecting effective

realization of the receivership process and in most cases receivership being not prefened by most

debtors as one of the best options available to them in case of default in payment by creditor.

Therefore this study seeks to examine the duties and liabilities of a receiver during the

Insolvency of a company, the mode of appointment of a receiver and the fonnalities that are

followed therein, how different statutes support the position of a receiver, loopholes in laws

governing receivership in Uganda and make recommendations thereafter.