Receivership Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Receivership, written in plain English, along with examples of how it is used.
What is Receivership?
(n) Receivership is the authority given to a person by a court to take over the custody, charge of a property or business etc of someone else, to run the property or business as per the direction issued by the court
History and Meaning of Receivership
Receivership has its roots in old English law, where a receiver was appointed to manage a debtor's property until their debts were paid. Today, receivership is a legal tool used by courts to protect and preserve assets that are at risk. A receiver can be appointed to take over the management and control of a business, property, or other asset, and is responsible for ensuring that it operates effectively and efficiently. Receiverships can be voluntary or involuntary, and can be used in both civil and criminal cases.
Examples of Receivership
- If a company is in financial distress and unable to pay its debts, a court may appoint a receiver to take over management of the company and its assets. The receiver may be tasked with selling assets to pay off creditors or reorganizing the company to make it profitable.
- In the case of a divorce, a court may appoint a receiver to manage jointly owned property until the division of assets is complete.
- In a criminal case, a receiver may be appointed to take control of assets that were obtained through illegal means and are subject to forfeiture.
Legal Terms Similar to Receivership
- Bankruptcy: The legal process by which a debtor's assets are liquidated or restructured to pay off outstanding debts.
- Trustee: A person or entity appointed to manage assets on behalf of a beneficiary, according to the terms of a trust.
- Conservatorship: The legal authority granted to a person to manage the affairs of someone who is unable to do so themselves due to physical or mental incapacity.