A receivership is the legal process that occurs when a receiver is sent in to take control of some or all of a company’s assets (alternatively known as enforcing a security interest).
The receiver is an independent, qualified outsider, who is generally appointed by a secured creditor (or in special circumstances by the court).
There are two types of security interest:
- Non-circulating security interests (such as land, plant and equipment)
- Circulating security interests (such as cash, stock and debts owed to the company)
Sometimes, a receiver is also given power to take control of the company – in that case, they’re known as a receiver and manager.
A company that is in receivership may also be in voluntary administration, a deed of company arrangement, provisional liquidation or liquidation.