{"id":10599,"date":"2021-04-14T19:00:06","date_gmt":"2021-04-14T23:00:06","guid":{"rendered":"http:\/\/www.irasmithinc.com\/blog\/?p=10599"},"modified":"2021-04-16T05:42:06","modified_gmt":"2021-04-16T09:42:06","slug":"what-is-a-receivership","status":"publish","type":"post","link":"https:\/\/irasmithinc.com\/blog\/what-is-a-receivership\/","title":{"rendered":"WHAT IS A RECEIVERSHIP?  OUR COMPLETE GUIDE TO RECEIVERSHIP SOLUTIONS"},"content":{"rendered":"<p><iframe loading=\"lazy\" title=\"YouTube video player\" src=\"https:\/\/www.youtube.com\/embed\/iBoFsM9BmC8\" width=\"860\" height=\"484\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><em>what is a receivership?<\/em><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">We hope that you and your family are safe, healthy and secure during this coronavirus pandemic. Ira Smith Trustee &amp; Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.<\/span><\/p>\n<h2 id='what-is-a-receivership'  id=\"boomdevs_1\"><b><i>What is a receivership?<\/i><\/b><\/h2>\n<p><a href=\"https:\/\/www.irasmithinc.com\/bankruptcy_services-corporate_receivership-and-bankruptcy.html\"><b><i>What is a receivership<\/i><\/b><\/a><span style=\"font-weight: 400;\"> is a question I am asked often. Receivership is a remedy available to secured lenders to recoup as much of their debt as possible.\u00a0 A secured creditor, normally a <\/span><i><span style=\"font-weight: 400;\">financial institution<\/span><\/i><span style=\"font-weight: 400;\">, has lent funds to the company or individual under a secured financing transaction.\u00a0 They did it this way so in the event the company or person defaults on its finance payments, they can enforce against the assets subject to the security.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"http:\/\/www.irasmithinc.com\/blog\/receivership-meaning\/\"><em>Receivership<\/em><\/a> is a different process than bankruptcy for the sale of the properties of a corporation. In Canada, the secured creditor is typically the Bank as the lender. Normally, when a borrower misses payments, they tend to be insolvent.\u00a0 However, it is possible to have a <\/span><i><span style=\"font-weight: 400;\">receivership<\/span><\/i><span style=\"font-weight: 400;\"> in Ontario even if the borrower is not <\/span><i><span style=\"font-weight: 400;\">insolvent<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this Brandon Blog, I am going to tell you all about <em>receivership<\/em>. <em>What is a receivership<\/em>? How it works. When it can be used? What types of <em>receivership<\/em> are there?<\/span><\/p>\n<h2 id='what-is-a-receivership-examples-of-receivership-in-a-sentence'  id=\"boomdevs_2\"><b><i>What is a receivership?\u00a0 Examples of receivership in a sentence<\/i><\/b><\/h2>\n<p><a href=\"https:\/\/www.investopedia.com\/terms\/r\/receivership.asp\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">What is a receivership<\/span><\/i><\/a><span style=\"font-weight: 400;\">?\u00a0 <em>Receivership<\/em> is a <\/span><i><span style=\"font-weight: 400;\">legal proceeding<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 Either a <\/span><i><span style=\"font-weight: 400;\">secured creditor<\/span><\/i><span style=\"font-weight: 400;\"> privately appoints the <\/span><i><span style=\"font-weight: 400;\">receiver<\/span><\/i><span style=\"font-weight: 400;\"> by instrument or a court appoints a person or company, called a <\/span><i><span style=\"font-weight: 400;\">receiver<\/span><\/i><span style=\"font-weight: 400;\">, to collect and manage the assets of a person or business that is unable to manage those assets effectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To understand more about the receivership process, we first need to look at the types of receivership. These are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Liquidating receivership<\/span><\/i><span style=\"font-weight: 400;\"> &#8211; This is a type of <\/span><i><span style=\"font-weight: 400;\">receivership<\/span><\/i><span style=\"font-weight: 400;\"> that is brought about when a company ceases operations because the management of the company is unable to make it a viable business again.\u00a0 If the business is not viable, then the receiver will not operate it and will find buyers for the assets.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Operating receivership<\/span><\/i><span style=\"font-weight: 400;\"> &#8211; This form of <\/span><i><span style=\"font-weight: 400;\">receivership<\/span><\/i><span style=\"font-weight: 400;\"> is when parts of the company are viable or must otherwise continue operating under <\/span><i><span style=\"font-weight: 400;\">receivership<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The business assets have a great deal of value if operating, but if shut down, relatively no value.\u00a0 In this case, the receiver will continue operating the business and the secured creditor will agree to lend funds if the business&#8217;s cash flow is insufficient.\u00a0 While operating the business, the receiver will also look for buyers.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The word \u201c<em>receiver<\/em>\u201d originally meant \u201ca person appointed by a court to manage the affairs of another, especially a <em>bankrupt<\/em> or <em>insolvent<\/em>&#8220;. The term is now more widely applied and refers to a person placed in temporary charge and control of another person&#8217;s assets or a business entity. A receivership is a form of governance used in a wide range of situations. It is particularly common in the fields of law and business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><em>What is a receivership<\/em> in a sentence &#8211; A <em>receivership<\/em> is a <em>legal process<\/em> started by a <em>secured creditor<\/em> either privately appointing a <em>receiver<\/em> by instrument or making an application to the court for an order that forces a party to carry out the duties of a <em>receiver<\/em> over the assets of a company or person.<\/span><\/p>\n<figure id=\"attachment_10601\" aria-describedby=\"caption-attachment-10601\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/g.page\/torontobankruptcy?share\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-10601 size-medium\" src=\"http:\/\/www.irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-300x169.jpg\" alt=\"what is a receivership\" width=\"300\" height=\"169\" data-wp-pid=\"10601\" data-pin-nopin=\"nopin\" title=\"\" srcset=\"https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-300x169.jpg 300w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1024x576.jpg 1024w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-768x432.jpg 768w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1200x675-cropped.jpg 1200w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-150x84.jpg 150w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-10601\" class=\"wp-caption-text\"><em>what is a receivership?<\/em><\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">In Canada, section 243(4) of the <\/span><i><span style=\"font-weight: 400;\">Bankruptcy and Insolvency Act<\/span><\/i><span style=\"font-weight: 400;\"> (Canada) (BIA) dictates that only a <\/span><i><span style=\"font-weight: 400;\">licensed insolvency trustee<\/span><\/i><span style=\"font-weight: 400;\"> can act as a receiver.\u00a0 From the above, you should now realize that there are two types of receivers:\u00a0 (i) <\/span><i><span style=\"font-weight: 400;\">privately appointed receiver<\/span><\/i><span style=\"font-weight: 400;\">; and (ii) <\/span><i><span style=\"font-weight: 400;\">court-appointed receiver<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2 id='what-is-a-receivership-10-day-notice-of-intention-to-enforce-security'  id=\"boomdevs_3\"><b><i>What is a receivership?\u00a0 <\/i><\/b><b><i>10 \u2013 Day Notice of Intention to Enforce Security<\/i><\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Section 244 of the <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\"> relates to a <em>secured creditor<\/em> who intends to enforce its security against an <em>insolvent debtor<\/em>, either through private appointment or by making an application to the court.\u00a0 This section states that any <em>secured creditor<\/em> who intends to enforce against all, or substantially all, of the <em>inventory, accounts receivable or other property<\/em> used by the <em>insolvent debtor<\/em> in its business, must give adequate notice.\u00a0 The notice must be in writing by using the form prescribed by the <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\"> defines adequate as a minimum of 10 days.\u00a0 A secured creditor must send out the <em>10-day notice of intention to enforce security<\/em> and cannot enforce its security until the 10 days have expired unless the debtor consents in writing to earlier enforcement.\u00a0 The purpose of giving the <em>10-day notice<\/em> is to allow the insolvent debtor a chance to either negotiate some resolution with the secured creditor or otherwise attempt to reorganize its financial affairs.\u00a0 An example of reorganizing would be speaking with new potential lenders, consideration of assets that could be sold to repay or otherwise reduce the indebtedness to the unhappy secured creditor.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The insolvent debtor may also be considering invoking an insolvency process such as a <\/span><i><span style=\"font-weight: 400;\">Division I Proposal<\/span><\/i><span style=\"font-weight: 400;\"> under the <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\"> to reorganize all of its debts to implement a financial reorganization strategy.\u00a0 If a <\/span><i><span style=\"font-weight: 400;\">proposal<\/span><\/i><span style=\"font-weight: 400;\"> or a <\/span><i><span style=\"font-weight: 400;\">notice of intention to make a proposal<\/span><\/i><span style=\"font-weight: 400;\"> under the <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\"> is filed by the insolvent debtor before the expiry of the 10 day period, then the enforcement action of the secured creditor has initially stayed.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">That <em>secured creditor<\/em> would have to make an application to the court to show that it has lost total confidence in the insolvent debtor&#8217;s abilities and it will not support any reorganization attempt.\u00a0 The application is to lift the automatic stay of proceedings that happened when the insolvent debtor filed, to allow the secured creditor to enforce its security against the assets to try to recover as much of the <\/span><i><span style=\"font-weight: 400;\">secured debt<\/span><\/i><span style=\"font-weight: 400;\"> as possible through the appointment of a <\/span><i><span style=\"font-weight: 400;\">receiver<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Why did 10 days become the official notice period?\u00a0 This was part of amendments to the <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\"> made in 2009.\u00a0 It arose as a .esult of court decisions over what is reasonable notice.\u00a0 The most famous case is one that insolvency practitioners refer to as <\/span><i><span style=\"font-weight: 400;\">Lister v. Dunlop<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The case made its way all the way up to the Supreme Court of Canada.\u00a0 The proper name of the case is <\/span><a href=\"https:\/\/scc-csc.lexum.com\/scc-csc\/scc-csc\/en\/item\/2439\/index.do\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">R.E. Lister Ltd. v. Dunlop Canada Ltd.<\/span><\/i><\/a><span style=\"font-weight: 400;\">, [1982] 1 S.C.R. 726.\u00a0 The decision was released on May 31, 1982.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The case dealt with a variety of issues, including <em><a href=\"http:\/\/www.irasmithinc.com\/blog\/what-is-receivership-receivership-order\/?relatedposts_hit=1&amp;relatedposts_origin=10599&amp;relatedposts_position=1\">what is receivership<\/a><\/em>.\u00a0 Another of the issues considered was a <\/span><i><span style=\"font-weight: 400;\">reasonable notice<\/span><\/i><span style=\"font-weight: 400;\"> to be given when a secured creditor demanded repayment of its <\/span><i><span style=\"font-weight: 400;\">demand loan<\/span><\/i><span style=\"font-weight: 400;\">, due to one or more <\/span><i><span style=\"font-weight: 400;\">defaults on loan<\/span><\/i><span style=\"font-weight: 400;\">?\u00a0 The most common default is defaulting on making the required <\/span><i><span style=\"font-weight: 400;\">loan payments<\/span><\/i><span style=\"font-weight: 400;\"> on time.\u00a0 The <\/span><i><span style=\"font-weight: 400;\">loan agreement<\/span><\/i><span style=\"font-weight: 400;\"> and debenture securing the loan stated that it was a demand loan and that the lender must give reasonable notice when making the demand.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, in the &#8220;old days&#8221;, there was never a definition of what reasonable notice was.\u00a0 In fact, in Ontario, the law at the time was that reasonable notice only came into being if the <\/span><i><span style=\"font-weight: 400;\">business owner<\/span><\/i><span style=\"font-weight: 400;\"> asked for a time to repay the loan.\u00a0 What was reasonable was a matter of discussion and negotiation.\u00a0 In <\/span><i><span style=\"font-weight: 400;\">Lister v. Dunlop<\/span><\/i><span style=\"font-weight: 400;\">, it was determined that Dunlop did not provide reasonable notice, based on the specific facts in that case.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Case law evolved and eventually, in 2009, the BIA was amended as part of the new provisions to bring <\/span><i><span style=\"font-weight: 400;\">receivership<\/span><\/i><span style=\"font-weight: 400;\"> under the <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\"> and <\/span><i><span style=\"font-weight: 400;\">receivers<\/span><\/i><span style=\"font-weight: 400;\"> subject to the supervision of the <\/span><a href=\"http:\/\/strategis.ic.gc.ca\/eic\/site\/bsf-osb.nsf\/eng\/Home\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">Office of the Superintendent of Bankruptcy Canada<\/span><\/i><\/a><span style=\"font-weight: 400;\">.\u00a0 The 10 day notice period was Parliament&#8217;s way to try to codify what reasonable notice is.<\/span><\/p>\n<h2 id='court-appointed-receivers-vs-privately-appointed-receivers'  id=\"boomdevs_4\"><b><i>Court Appointed Receivers vs. Privately Appointed Receivers<\/i><\/b><\/h2>\n<p><span style=\"font-weight: 400;\">As discussed above, <\/span><i><span style=\"font-weight: 400;\">receivers<\/span><\/i><span style=\"font-weight: 400;\"> are appointed when <\/span><i><span style=\"font-weight: 400;\">secured creditors<\/span><\/i><span style=\"font-weight: 400;\"> want to recover on their <\/span><i><span style=\"font-weight: 400;\">secured loans<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 <\/span><i><span style=\"font-weight: 400;\">Receivership<\/span><\/i><span style=\"font-weight: 400;\"> is a remedy for <\/span><i><span style=\"font-weight: 400;\">secured creditors<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 It is not a remedy for <\/span><i><span style=\"font-weight: 400;\">unsecured creditors<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The intent is for the <\/span><i><span style=\"font-weight: 400;\">receiver<\/span><\/i><span style=\"font-weight: 400;\"> to take possession of the insolvent <\/span><i><span style=\"font-weight: 400;\">company assets<\/span><\/i><span style=\"font-weight: 400;\"> subject to the <\/span><i><span style=\"font-weight: 400;\">security agreement<\/span><\/i><span style=\"font-weight: 400;\"> and conduct a <\/span><i><span style=\"font-weight: 400;\">sale of assets<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The <\/span><i><span style=\"font-weight: 400;\">proceeds of the sale<\/span><\/i><span style=\"font-weight: 400;\"> will then be distributed in accordance with the priority of the creditors under the <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The <\/span><i><span style=\"font-weight: 400;\">secured creditor<\/span><\/i><span style=\"font-weight: 400;\"> should want to make sure that it is in the first place to receive the funds from the <\/span><i><span style=\"font-weight: 400;\">receiver<\/span><\/i><span style=\"font-weight: 400;\">, for the <\/span><i><span style=\"font-weight: 400;\">receivership process<\/span><\/i><span style=\"font-weight: 400;\"> they are paying for!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">From the above, by now, you have probably realized that a <\/span><i><span style=\"font-weight: 400;\">privately appointed receiver <\/span><\/i><span style=\"font-weight: 400;\">is appointed in writing by the <\/span><i><span style=\"font-weight: 400;\">secured creditor<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The <\/span><i><span style=\"font-weight: 400;\">receiver<\/span><\/i><span style=\"font-weight: 400;\"> gets properly retained and then is given an <\/span><i><span style=\"font-weight: 400;\">appointment letter<\/span><\/i><span style=\"font-weight: 400;\"> by the <\/span><i><span style=\"font-weight: 400;\">secured creditor<\/span><\/i><span style=\"font-weight: 400;\"> after the <\/span><i><span style=\"font-weight: 400;\">10 day notice period<\/span><\/i><span style=\"font-weight: 400;\"> has either passed or was waived by the <\/span><i><span style=\"font-weight: 400;\">insolvent debtor<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The <\/span><i><span style=\"font-weight: 400;\">privately appointed receiver<\/span><\/i><span style=\"font-weight: 400;\"> gets its powers from the <\/span><i><span style=\"font-weight: 400;\">security documents<\/span><\/i><span style=\"font-weight: 400;\"> which will outline the approved steps the <\/span><i><span style=\"font-weight: 400;\">receiver<\/span><\/i><span style=\"font-weight: 400;\"> can take.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Court-appointed receivers<\/span><\/i><span style=\"font-weight: 400;\">, as the term implies, are appointed by the court.\u00a0 The secured creditor properly retains the receiver and makes an application to the court for the appointment of the receiver.\u00a0 The secured creditor is the plaintiff in this litigation.\u00a0 If the court grants the order, then the <\/span><i><span style=\"font-weight: 400;\">court-appointed receiver<\/span><\/i><span style=\"font-weight: 400;\"> begins the <\/span><i><span style=\"font-weight: 400;\">receivership administration<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The powers and responsibilities of the <\/span><i><span style=\"font-weight: 400;\">court-appointed receiver<\/span><\/i><span style=\"font-weight: 400;\"> come from the court order, called the <\/span><i><span style=\"font-weight: 400;\">Appointment Order<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The steps the receiver will take in determining what method will realize the most money possible from the sale of assets should be pretty well identical under both a <\/span><i><span style=\"font-weight: 400;\">court-appointed receivership<\/span><\/i><span style=\"font-weight: 400;\"> and a <\/span><i><span style=\"font-weight: 400;\">privately appointed receivership<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The analysis of how and the steps to be taken to realize the most money possible from the assets of the <\/span><a href=\"https:\/\/en.wikipedia.org\/wiki\/Receivership\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">company in receivership<\/span><\/i><\/a><span style=\"font-weight: 400;\"> should be the same, regardless of the form of appointment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Either way, as stated above, the receiver must be a <\/span><i><span style=\"font-weight: 400;\">licensed insolvency trustee<\/span><\/i><span style=\"font-weight: 400;\"> who is experienced in acting as a <\/span><i><span style=\"font-weight: 400;\">licensed insolvency practitioner<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<figure id=\"attachment_10601\" aria-describedby=\"caption-attachment-10601\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/g.page\/torontobankruptcy?share\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-10601\" src=\"http:\/\/www.irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-300x169.jpg\" alt=\"what is a receivership\" width=\"300\" height=\"169\" data-wp-pid=\"10601\" data-pin-nopin=\"nopin\" title=\"\" srcset=\"https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-300x169.jpg 300w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1024x576.jpg 1024w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-768x432.jpg 768w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1200x675-cropped.jpg 1200w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-150x84.jpg 150w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-10601\" class=\"wp-caption-text\"><em>what is a receivership<\/em><\/figcaption><\/figure>\n<h2 id='what-is-a-receivership-duties-of-a-receiver'  id=\"boomdevs_5\"><b><i>What is a receivership? Duties of a receiver<\/i><\/b><\/h2>\n<p><span style=\"font-weight: 400;\"><em>Receivers<\/em> are required to act honestly and in good faith.\u00a0 A <\/span><i><span style=\"font-weight: 400;\">privately appointed receiver<\/span><\/i><span style=\"font-weight: 400;\"> has a duty to the <\/span><i><span style=\"font-weight: 400;\">secured creditor<\/span><\/i><span style=\"font-weight: 400;\"> who appointed the <\/span><i><span style=\"font-weight: 400;\">receiver<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 A <\/span><i><span style=\"font-weight: 400;\">court-appointed receiver<\/span><\/i><span style=\"font-weight: 400;\"> has a duty to act in good faith to all creditors.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The main roles of the <em>receiver<\/em>, whether private or court-appointed, can be summarized as to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Secure all the assets of the insolvent debtor pledged under the security agreement or covered by the Appointment Order.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Make sure the receiver has <\/span><i><span style=\"font-weight: 400;\">control of property<\/span><\/i><span style=\"font-weight: 400;\">, the assets are conserved and properly insured.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Advance the rights of the debtor with the approval of either the secured creditor or the court.\u00a0 This could include continuing or beginning any necessary litigation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Formulate the plan to maximize the realization from the sale of assets.\u00a0 This also involves a decision as to whether or not to operate the business of the company.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Offer the assets for sale in a properly advertised public sale.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Complete the sale and distribute the net proceeds in accordance with the provisions of the BIA.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Make <\/span><i><span style=\"font-weight: 400;\">regular reporting<\/span><\/i><span style=\"font-weight: 400;\"> to the court and\/or the appointing creditor\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Obtain the approval of the secured creditor, and under a court appointment, approval of the court for all actions to be taken by the receiver.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In a court appointment, to obtain the approval of the court for its fee and disbursements and for those of the receiver&#8217;s legal counsel.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The <\/span><i><span style=\"font-weight: 400;\">Appointment Order<\/span><\/i><span style=\"font-weight: 400;\"> generally will give the <\/span><i><span style=\"font-weight: 400;\">court-appointed receiver<\/span><\/i> <i><span style=\"font-weight: 400;\">extensive powers<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2 id='i-want-to-summarize-the-difference-between-company-receivership-and-bankruptcy'  id=\"boomdevs_6\"><b>I want <\/b><b><i>to summarize the difference between company receivership and bankruptcy<\/i><\/b><\/h2>\n<p><span style=\"font-weight: 400;\">I find that many times people will confuse the terms <a href=\"http:\/\/www.irasmithinc.com\/blog\/receivership-in-bankruptcy\/?relatedposts_hit=1&amp;relatedposts_origin=10599&amp;relatedposts_position=2\"><em>receivership and bankruptcy<\/em><\/a>.\u00a0 <em>What is a receivership<\/em> is not the same as what is bankruptcy.\u00a0 I want <\/span><i><span style=\"font-weight: 400;\">to summarize the difference between company receivership and bankruptcy<\/span><\/i><span style=\"font-weight: 400;\">. There are important differences between <em>bankruptcy and receivership<\/em>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The terms <\/span><i><span style=\"font-weight: 400;\">bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> and <\/span><i><span style=\"font-weight: 400;\">receivership<\/span><\/i><span style=\"font-weight: 400;\"> are often mistakenly used; they are not the very same thing. <\/span><i><span style=\"font-weight: 400;\">Bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> is a legal process for <\/span><i><span style=\"font-weight: 400;\">unsecured creditors<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The <\/span><i><span style=\"font-weight: 400;\">bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> of a person and that person&#8217;s <\/span><i><span style=\"font-weight: 400;\">discharge from bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> acts to discharge that person&#8217;s <\/span><i><span style=\"font-weight: 400;\">unsecured debt<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 As a company is never discharged from bankruptcy, the <\/span><i><span style=\"font-weight: 400;\">bankruptcy process<\/span><\/i><span style=\"font-weight: 400;\"> has the effect of ending the company&#8217;s business.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">What is a receivership<\/span><\/i><span style=\"font-weight: 400;\">?\u00a0 Receivership on the other hand, is a <\/span><i><span style=\"font-weight: 400;\">legal process<\/span><\/i><span style=\"font-weight: 400;\"> for the benefit of <\/span><i><span style=\"font-weight: 400;\">secured creditors<\/span><\/i><span style=\"font-weight: 400;\"> that safeguards their security if an insolvent<\/span><i><span style=\"font-weight: 400;\"> borrower defaults<\/span><\/i><span style=\"font-weight: 400;\"> on its secured debt<\/span><i><span style=\"font-weight: 400;\"> financial obligations<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<figure id=\"attachment_10601\" aria-describedby=\"caption-attachment-10601\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/bit.ly\/3rct600\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-10601\" src=\"http:\/\/www.irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-300x169.jpg\" alt=\"what is a receivership\" width=\"300\" height=\"169\" data-wp-pid=\"10601\" data-pin-nopin=\"nopin\" title=\"\" srcset=\"https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-300x169.jpg 300w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1024x576.jpg 1024w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-768x432.jpg 768w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1200x675-cropped.jpg 1200w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-150x84.jpg 150w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-10601\" class=\"wp-caption-text\"><em>what is a receivership?<\/em><\/figcaption><\/figure>\n<h2 id='what-is-a-receivership-is-receivership-the-right-solution-for-you'  id=\"boomdevs_7\"><b><i>What is a receivership?\u00a0 Is receivership the right solution for you?<\/i><\/b><\/h2>\n<p><span style=\"font-weight: 400;\">I hope you enjoyed the <\/span><i><span style=\"font-weight: 400;\">what is a receivership<\/span><\/i><span style=\"font-weight: 400;\"> Brandon Blog post. I have gone to great lengths to describe <em>what is a receivership<\/em>, the different types of receivership and that it is a remedy for <em>secured creditors<\/em>. However, many times, if properly handled, it can also assist the <em>business owner<\/em>. The entrepreneur may be very frustrated that the company can no longer pay all its debts as they come due and is looking for a way out, a way to sell the business or a way to get rid of the sick parts of the business and keep the good parts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There may be sufficient value to take care of the secured creditor, but nothing for anyone else, including the unsecured creditors. There may be some business units that should not survive, but if cut out, the business will be viable. A receivership might very well accomplish the goals for the entrepreneur also. I have many times structured a receivership process, in order to meet the goals of the entrepreneur, while satisfying the requirements of the secured creditor.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The<\/span><a href=\"http:\/\/www.irasmithinc.com\/contact_us.html\"><span style=\"font-weight: 400;\"> Ira Smith Team<\/span><\/a><span style=\"font-weight: 400;\"> utilizes new modern-day ways to get you out of your debt difficulties while<\/span><a href=\"http:\/\/www.irasmithinc.com\/blog\/bankruptcy-alternative\/\"> <i><span style=\"font-weight: 400;\">avoiding bankruptcy<\/span><\/i><\/a><span style=\"font-weight: 400;\">. We can get you the relief you need and so deserve.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We understand that people and businesses facing financial issues need a realistic lifeline. There is no \u201cone solution fits all\u201d method with the<\/span><a href=\"http:\/\/www.irasmithinc.com\/contact_us.html\"><span style=\"font-weight: 400;\"> Ira Smith Team<\/span><\/a><span style=\"font-weight: 400;\">. Not everyone has to <\/span><i><span style=\"font-weight: 400;\">file bankruptcy in Canada<\/span><\/i><span style=\"font-weight: 400;\">. The majority of our clients never do. We help many people and companies stay clear of <\/span><i><span style=\"font-weight: 400;\">bankruptcy<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That is why we can establish a new restructuring procedure for <\/span><i><span style=\"font-weight: 400;\">paying down debt<\/span><\/i><span style=\"font-weight: 400;\"> that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need,<\/span><a href=\"http:\/\/www.irasmithinc.com\/contact_us.html\"><span style=\"font-weight: 400;\"> contact the Ira Smith Trustee &amp; Receiver Inc. group today<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><a href=\"http:\/\/www.irasmithinc.com\/contact_us.html\"><span style=\"font-weight: 400;\">Call us now for a no-cost consultation<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, <\/span><strong><i>Starting Over, Starting Now<\/i><\/strong><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">We hope that you and your family are safe, healthy and secure during this coronavirus pandemic. Ira Smith Trustee &amp; Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.<\/span><\/p>\n<figure id=\"attachment_10601\" aria-describedby=\"caption-attachment-10601\" style=\"width: 580px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/bit.ly\/3rct600\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-10601\" src=\"http:\/\/www.irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1024x576.jpg\" alt=\"what is a receivership\" width=\"580\" height=\"326\" data-wp-pid=\"10601\" data-pin-nopin=\"nopin\" title=\"\" srcset=\"https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1024x576.jpg 1024w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-300x169.jpg 300w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-768x432.jpg 768w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-1200x675-cropped.jpg 1200w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership-150x84.jpg 150w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/04\/what-is-a-receivership.jpg 1280w\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" \/><\/a><figcaption id=\"caption-attachment-10601\" class=\"wp-caption-text\"><em>what is a receivership?<\/em><\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>what is a receivership? We hope that you and your family are safe, healthy and secure during this coronavirus pandemic. Ira Smith Trustee &amp; Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. What is a receivership? What is a receivership is [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[4931,76,16,2452,3646,4927,85,863,4934,4928,4929,4932,4930,4269,89,4933,2511,4926,3929],"class_list":["post-10599","post","type-post","status-publish","format-standard","hentry","category-brandon-blog-post","tag-10-day-notice-of-intention-to-enforce-security","tag-bankrupt","tag-bankruptcy-and-insolvency-act","tag-court-appointed-receiver","tag-duties-of-a-receiver","tag-examples-of-receivership-in-a-sentence","tag-insolvent","tag-ira-smith-trustee","tag-is-receivership-the-right-solution-for-you","tag-legal-proceeding","tag-liquidating-receivership","tag-lister-v-dunlop","tag-operating-receivership","tag-privately-appointed-receiver","tag-receivership","tag-receivership-and-bankruptcy","tag-secured-creditor","tag-what-is-a-receivership","tag-what-is-receivership"],"_links":{"self":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/10599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/comments?post=10599"}],"version-history":[{"count":5,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/10599\/revisions"}],"predecessor-version":[{"id":10620,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/10599\/revisions\/10620"}],"wp:attachment":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/media?parent=10599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/categories?post=10599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/tags?post=10599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}