DEFINITION of 'Receivership'

A type of corporate bankruptcy in which a receiver is appointed by bankruptcy courts or creditors to run the company. The receiver may be appointed by a bankruptcy court, as a matter of private proceedings, or by a governing body. In most cases the receiver is given ultimate decision-making powers and has full discretion in deciding how the received assets will be managed.

BREAKING DOWN 'Receivership'

The primary responsibility of the receiver is to recoup as much of the unpaid loans as possible. Being in receivership is not an enviable situation for any company. Oftentimes, receivers find that the best way to pay back loans is to liquidate the company's assets, which effectively puts the company out of business, as its assets are sold at deep discounts in order to recoup some of the monies owed.

  1. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  2. Receiver

    A person appointed by a bankruptcy court or secured creditor ...
  3. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt ...
  4. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  5. Discharge In Bankruptcy

    A permanent order that releases the debtor from personal liability ...
  6. Interest Coverage Ratio

    A debt ratio and profitability ratio used to determine how easily ...
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  1. What can working capital be used for?

    Working capital is used to cover all of a company's short-term expenses, including inventory, payments on short-term debt ... Read Full Answer >>
  2. Does working capital include stock?

    A certain portion of a company’s working capital is generally composed of earnings; however, current short-term assets that ... Read Full Answer >>
  3. Does working capital include short-term debt?

    Short-term debt is considered part of a company's current liabilities and is included in the calculation of working capital. ... Read Full Answer >>
  4. What are some alternatives a company can attempt prior to resorting to liquidation?

    Some alternatives a company's owners can attempt prior to resorting to liquidation are selling the company, raising money ... Read Full Answer >>
  5. Under what circumstances might a company decide to liquidate?

    There are many reasons a company may decide to liquidate. A smaller company may decide to liquidate if one of the main owners ... Read Full Answer >>
  6. What happens to the shares of a company that has been liquidated?

    The fate of a liquidating company’s shares depends on the type of liquidation the company is undergoing. The most common ... Read Full Answer >>

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