receiverships

Receivership is a legal mechanism in which a court or statutory authority appoints a receiver to take custody, control, and management of a debtor’s assets or business. The goal is to preserve value and protect the interests of creditors and other stakeholders, often while the debtor is insolvent or in dispute over ownership, contracts, or financial obligations.

A receiver is typically appointed at the request of a secured creditor or by the court, and may be empowered to take possession, operate the business, collect income, protect assets, and sell or realize assets. The receiver acts under a fiduciary duty to maximize value and to apply proceeds according to applicable priorities or court directions. The specific powers and duties are defined by statute, court order, or the terms of the appointment.

In corporate contexts, receiverships can arise when a company is insolvent or facing significant governance or financial difficulties. They can involve continuing the business in the short term to preserve value, or winding down and liquidating assets. In many jurisdictions, secured creditors use receiverships to realize the value of collateral, while other creditors may have limited influence over the process.

Receiverships are distinct from some insolvency procedures such as reorganizations or bankruptcies, though they may intersect with them. The process typically involves court oversight, asset appraisals, potential asset sales or restructurings, and a final disposition of the assets or the business. The impact often extends to employees, contractors, and customers, who may be subject to changes in operations or contracts during the receivership.