recoverability/ irrecoverability of trade receivables

Yes that is what is meant - or they could have said "This leads to an increased risk REGARDING/ABOUT the recoverability of receivables which may be overvalued."

We are talking at cross purposes - I was saying yes to your interpretation! I was just showing that they could have used the word recoverability in the sentence. To say there is an increased risk about whether (or not) a debt is recoverable amounts to the same thing.