Fixed charge receiverships play a pivotal role in managing distressed or defaulting property assets, with receivers often stepping into complex situations where planning applications or appeals are already in progress. Navigating these proceedings can be tricky – planning matters can be highly nuanced and subject to rapid change – and there is often some uncertainty with lenders as to whether a receivership is the best tool to use in these situations (versus, for example, an administration).

While each situation will always be different, following recent instructions, we have identified the following as some useful learning points. Please do feel free to contact Nick Middleton or Alex Minhinick if you have any questions where receivership and planning overlap.

1. Pre-appointment due diligence and preparation

At the risk of stating the obvious, one of the very first steps for any fixed charge receiver prior to taking an appointment is to understand the planning position of the property in question. This assessment should cover not only the current use and any existing planning permissions but also any ongoing planning applications or appeals.

Ideally, the secured lender will be up-to-date on any ongoing proceedings, but lawyers or the appointed planning consultants (where possible) will also be useful points of contact here.

More specifically, key due diligence / preparatory points include:

• Ensuring that the relevant applicant/appellant is the same party as the mortgagor of the relevant property. It’s not uncommon for another party within the same group/connection to have conduct of planning proceedings (whether by design or inadvertently), so this should be ascertained at an early stage.
• Building a comprehensive picture of the property's planning history and current status (including identifying any time-critical actions, deadlines etc). Building this picture will allow the lender and receivers to consider some important questions which may influence the overall strategy (and timing), for example:
  • What are the prospects of success of the relevant application or appeal?
  • Does progressing with the current application or appeal align with the desired realisation strategy (in some cases, it may be prudent to withdraw and reapply, or to pursue an entirely different planning strategy)?
  • Should the existing planning consultants and advisers be retained, or would the application or appeal benefit from a fresh perspective?
• As part of the usual pre-appointment legal security review, lawyers should confirm that the receivers will have the requisite powers to take conduct of any ongoing planning proceedings. In our experience, ongoing planning proceedings (rather than commencing a new planning application or appeal) are often not specifically contemplated. Instead, it can be covered by powers akin to the following:
  • “the power to bring, prosecute, enforce, defend and abandon any action, suit or proceedings in relation to the property which the receivers think fit”;
  • “the power to apply for and maintain any planning permission, building regulation approval or any other authorisation, in each case as the receivers think fit”; and
  • “the power to do all other acts and things which they may consider necessary or desirable for realising the property or incidental or conducive to any of the rights, powers or discretions conferred on a receiver under or by virtue of the relevant security agreement”.
• Finding alternative planning consultants and/or advisers, if the plan is not to retain the incumbents (whether for strategic or commercial reasons).
• Understanding the current status of the relationship with the mortgagor. Where things are particularly strained, the secured lender and the receivers will have to be particularly vigilant to ensure the mortgagor’s directors/officers are not able to intervene in the planning process. Conversely, if the relationship with the mortgagor is relatively good and the lender is happy with the present conduct of the proceedings, then the lender may wish to consider whether (factoring in the time it will take for the proceedings to conclude) it would be better to delay the appointment until the proceedings have been concluded (so as to avoid any potential disruption or delay to them).

2. Steps on appointment

On appointment, as with all other stakeholders, the receivers should look to engage promptly with the planning authority in relation to the ongoing proceedings, taking care to clearly set out:

• Their role as agent of the applicant/appellant;
• Whether any existing consultants or advisers have been retained by the receivers; and
• The fact that the directors and other officers of the applicant are no longer entitled to conduct the proceedings.

Challenges to a receiver’s role and/or duties are not unusual, given it is a specialist area involving a unique agency relationship. In the planning context, we have seen technical arguments raised in relation to the receivers’ role and their ability to continue the appeal on behalf of the appellant (where an appeal is not being progressed by the appellant it may be dismissed for want of prosecution).

We have had success in pushing back such arguments by giving the planning officer a clear picture of (i) the basis of receivers’ agency (and authority for that, including by referring back to the appointment deed and the relevant security document), (ii) the scope of the receivers’ powers (and, specifically, the fact that they were sufficiently broad to cover taking over conduct of the appeal) and ultimately (iii) why the statements made by the challenging party were incorrect. 

Lastly, as a final note, and as with any other strand of a receiver’s appointment, it is important to ensure that robust records are kept in relation to the planning process and that the rationale for all decisions is recorded.