Explainer: Who is a receiver?

A receiver is a person appointed to take over a person or an entity's property, finances, general assets, or business operations.

According to Investopedia, Receivers can be appointed by courts, government regulators, or private entities.

These receivers upon appointment are expected to realize and secure assets and manage affairs to pay debts.

They maximize profits and asset value, and either terminate operations or sell all or part of the company.

A company is said to be in receivership when it is handed over to a receiver.

According to dottoreco.com, a court-appointed receiver is a neutral, third-party professional whose duty is to manage the company's assets during a lawsuit in an effort to repay creditors and resume profitable operations.

What is a Receivership?

A receivership is a legal tool used by courts to appoint persons or entities that can help creditors to recover funds that borrowers have defaulted and also safeguard banks and companies from bankruptcy.

It is said that handing over defaulting companies to receivers makes it easier for lenders to recover funds that are owed to them if a borrower defaults on a loan.

Apart from defaulting loans and restructuring of companies, receivership may also arise due to the occurrence of dispute among persons to complete a project, liquidate assets, or sell a business, for example.
Receivership is an alternative to bankruptcy.

The processes involved in receivership come from legal processes where a court determines whether it is in the best interest of the parties involved, to either liquidate assets or hand them over to another company.

Upon the court’s discretion, the receiver is authorized to sell the assets at a legal sale, which is conducted in the form of an auction.