Receivership

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.

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