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    Who is a receiver?

    • A receiver is an individual who is appointed as custodian of a person or entity's property, finances, general assets, or business operations.
    • He or she can be appointed by courts, government regulators, or private entities. A court appointed receiver is usually a neutral third party.
    • Only a Licensed Insolvency Trustee can act as a Receiver.
    • A receiver seeks to realize and secure assets and manage affairs of the company that is under severe debt. In the case of businesses, receivers seek to maximize profits and asset value, and either decide to terminate operations or sell all or part of the company based on the condition of the company.

      What is receivership?

    • When a receiver is appointed, a company is said to be "in receivership." This is usually after the company has a long period of overdue debt collection attempts.

    • Businesses are usually notified of their receivership through official documents and correspondence.

      Responsibilities of a receiver

    The receiver has the following responsibilities – - He or she reviews the corporation’s finances and operations to identify inefficiencies and notify the creditor about the same. - He or she oversees the distribution of proceeds from liquidation after the deduction of receivership fees and expenses. The receiver usually distributes based on a priority basis and pro-rata basis. - In circumstances that restructuring is possible, the receiver negotiates terms with creditors and creates a repayment plan and closely monitors its execution thereafter.

    Role and benefits of appointing a receiver of the receiver

    • The role of the receiver is to develop strategies to pay company debts typically unavailable under bankruptcy. He or she has the flexibility of securing more money for the creditors and stockholders, potentially saving the company from closing.
    • The receiver is an alternative to bankruptcy – this process carries less stigma, requires less paperwork, has lesser costs and has fewer court proceedings.
    • Having said that, receivership and bankruptcy are not mutually exclusive, they can occur at the same time or a receivership can occur without a company being bankrupt.

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