What does receivership mean?
Receivership is the legal condition in which a receiver, appointed by a court or otherwise acting under legal authority, manages a business or controls and realizes its assets. It commonly occurs when a company is unable or unwilling to meet its financial obligations and the court determines that formal supervision is needed to protect creditors and preserve the value of the business. In everyday financial reporting, “the company entered receivership” means that it was placed under such legal control. The term is mainly associated with insolvency and corporate finance, although it can also refer more generally to the state of being a receiver. It is distinct from simple bankruptcy: receivership identifies the appointment and control of a receiver, whereas bankruptcy refers more broadly to a formal legal process in which a debtor is relieved of control over assets and liquidation is authorized. The word is most useful when describing the specific legal mechanism used to administer a distressed business.
nounThe state or condition of being a receiver, especially the legal position of a business or asset under the control of a receiver appointed to manage or realize it. The term most commonly refers to insolvency proceedings.
- The legal state in which a business or its assets are administered by a court-appointed receiver.
- The condition of being under the control or management of a receiver.
"The company was placed into receivership after efforts to restructure its debts failed."
"The court appointed a receiver to oversee the company's affairs while it remained in receivership."
"The business entered receivership, and its assets were sold to repay creditors."
The word is normally used in the singular or as an uncountable legal term, but the plural is used when referring to multiple separate cases or proceedings.
"The records include several receiverships involving small businesses."
In receivership, a court-appointed receiver takes control of a business or its assets to protect creditors and preserve value.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does receivership come from?
Receivership is formed from receiver, which in turn comes from the verb receive, from Latin recipere, “to take back, receive, or take into one's hands.” The legal sense developed as businesses and their assets came to be placed under the management of a person appointed to receive and administer them on behalf of the court or creditors. Related words include reception, recipient, and receptacle.
How receivership is actually used
The word is primarily legal and business-related. In British and American usage, it usually implies that a receiver has been appointed, often because an organization is financially distressed; it is more specific than simply being in financial difficulty.