receivership n. the process of appointment by a court of a receiver to take custody of the property, business, rents and profits of a party to a lawsuit pending a final decision on disbursement or an agreement that a receiver control the financial receipts of a person who is deeply in debt (insolvent) for the benefit of creditors. When receivership is associated with a consumer bankruptcy, the receiver takes possession of (“receives”) the debtor’s assets, and liquidates/distributes them to the creditors according to rules contained in Canada’s Bankruptcy and Insolvency Act. The receiver also handles such tasks as submitting tax returns on behalf of the debtor. Receivership is a common feature of Chapter 11 business bankruptcies, which allow companies to request a court's protection from creditors and to restructure or eliminate their debts. Other forms of bankruptcy, including Chapter 7 and Chapter 13 personal bankruptcy, involve the work of a court-appointed trustee. A receiver is more directly involved in the management of assets than a bankruptcy .
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See More First Known Use of receivership 15th century, in the meaning defined at sense 1 Keep scrolling for more Learn More about receivership Share receivership Post the Definition of receivership to Facebook Share the Definition of receivership on Twitter Time Traveler for receivership. See more words from the same century Dictionary Entries near receivership receiver receiver general receiver ring receivership receiving barn receiving blanket receiving clerk.
Accessed 8 Jul. Keep scrolling for more More Definitions for receivership receivership. Please tell us where you read or heard it including the quote, if possible. Test Your Knowledge - and learn some interesting things along the way. Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!
And who put it there, anyway? Literally How to use a word that literally drives some people nuts. Is Singular 'They' a Better Choice? Can you spell these 10 commonly misspelled words? Receivership only comes into play when there are secured debts to be addressed, requiring the liquidation of assets for distribution to creditors. Thus, receivership may be part of consumer bankruptcies, but is not usually part of consumer proposals.
Receivership and bankruptcy are sometimes taken to be the same thing, but they are distinct parts of what is experienced by the consumer as the bankruptcy process. Your Trustee is entrusted to work for the best result for both you and your creditors, and if receivership is involved in your bankruptcy, the same individual may also be your receiver.
In some situations, such as consumer bankruptcy, receivers are appointed by the court. You may have read about privately appointed receivers. In business situations, creditors sometimes appoint receivers privately to liquidate specific assets which have been used as surety against a debt.
This can happen outside the context of a bankruptcy, simply because a specific debt has not been paid. When a receiver is appointed, a company is said to be "in receivership. Receivership is an alternative to bankruptcy and potentially a better option for companies facing financial difficulty. Compared to bankruptcy, the process of receivership carries less stigma, requires less paperwork, and has fewer court proceedings.
Going into receivership is an alternative to declaring bankruptcy for many companies. The receiver manages the debt payment process and charges a fee doing so; however, it is less costly than bankruptcy.
If liquidation is the preferred or only option, the receiver sells assets secured under each contract. If restructuring is possible, the receiver negotiates terms with creditors and creates a repayment plan.
The receiver may also hire new management to run the company more efficiently and profitably. By communicating with a neutral receiver, the corporation and its creditors are more likely to reach a favorable understanding and in less time than under bankruptcy proceedings. Because the process of receivership begins quickly, many employees are blindsided by changes in the corporation, such as involuntary terminations and cuts in benefits or wages.
Court-appointed receivers are officers of the appointing court; they do not act as fiduciaries for creditors that is, protect the interest of those who are owed money as debtors and trustees do in bankruptcy cases. A receiver has the flexibility to develop strategies to pay company debts typically unavailable under bankruptcy.
More money may be secured for creditors and stockholders, potentially saving the company from closing. However, depending on the proceeds from asset sales and amounts owed for secured and unsecured debts , not all creditors and stockholders are paid during liquidation.
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