Bankruptcy - Corporate Services
Receivership & Bankruptcy
Receivership and bankruptcy are two words that no corporation wants to hear. Never-the-less they can be a part of corporate life, albeit unpleasant. There are times when receivership and/or bankruptcy are the only alternatives for a corporation.
What is receivership?
Receivership is a remedy available to secured creditors to recover amounts outstanding under a secured loan in the event the company defaults on its loan payments. Receivership can be an alternative to bankruptcy for the sale of the assets of a corporation. In Canada the secured creditor is normally the Chartered Bank as lender. Receivership and bankruptcy can occur at the same time or a receivership can occur without a company being bankrupt.
What does the receiver do?
The receiver attempts to recoup as much of the unpaid loan as possible by ultimately selling the assets subject to the lender's security. There are times that in order to do so a receiver must first operate the business in order to maximize the sales value of the company's assets. The assets are sold and the money from the sale is used to repay all or part of the monies owing to the secured creditor. The receiver can:
- Take control of property
- Use the assets to operate the business
- Supervise liquidation proceedings and
- Remit the proceeds according to priorities established by common or statutory law
What is the difference between a trustee and a receiver?
When a corporate entity or individual becomes bankrupt a licensed insolvency trustee is appointed. Trustees, licensed and supervised by the federal government, carry out the administration of a bankruptcy. A receiver is usually instructed to take possession of the assets and control the receipts and disbursements of the debtor, either by private appointment or Court Order.
When you need experts in receivership and bankruptcy, and especially if you believe your lender is losing confidence in your company, contact Ira Smith Trustee & Receiver Inc. for a consultation to determine what is best for your company, so you can be Starting Over, Starting now you can live a debt free life.