Receivership

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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.

INVESTOPEDIA EXPLAINS '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.

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RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What happens to the shares of a company that has been liquidated?

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  4. What is the difference between compulsory and voluntary liquidation?

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