Receivership is a kind of bankruptcy in which a business reorganizes with the assistance of a court-appointed trustee. According to receivership law, the trustee acts as an agent of the court to liquidate assets. Creditors are paid once the assets are liquidated. Receiverships can result from a number of situations. Sometimes, a company’s creditors insist on the appointment of a receiver to preserve assets and ensure that they will be repaid. In other cases, a court may appoint a receiver as part of a bankruptcy ruling.
Are you wondering what is receivership and how do I define receivership? Individuals are not eligible for receivership and there is no debt discharge like there is in bankruptcy proceedings. In addition to overseeing the liquidation of assets, receivers can be appointed in deadlocked cases involving shareholder, partner or member disputes, unlike with bankruptcy proceedings. The choice to file for receivership vs bankruptcy is an important decision that requires advice from experienced and professional legal counsel.
Contact a receivership lawyer from our law firm for receivership services and we can help you decide if receivership is the best option for you or your company.