Comparing Receivership And Bankruptcy
Bankruptcy and Receivership are both legal processes related to financial distress which can result in a Business Liquidation. Liquidation of a company may be the only option when the debtor is unable to repay its creditors. This blog aims to explain the main difference between these two concepts.
Difference Between Receivership And Bankruptcy
What Is A Receivership?
Receivership is a legal process that is typically initiated by a creditor who holds security over a business’s assets and is concerned about the debtor’s financial stability. A Receiver is appointed by the court or a secured creditor to take control of the debtor’s assets and manage them to maximize recovery. The Receiver’s primary duty is to protect the interests of the secured creditor(s) but also has a duty to other stakeholders, including unsecured creditors. Receivership is often used as a means of avoiding a business’s complete liquidation and can lead to the sale of the business as a going concern or a restructuring of operations.
What Is Bankruptcy?
Bankruptcy is a legal process designed to help individuals and businesses who are unable to meet their financial obligations to resolve their debts. In Canada, bankruptcy is primarily governed by the Bankruptcy and Insolvency Act. Bankruptcy is typically initiated by the debtor who voluntarily files for bankruptcy, or it can be forced by creditors through a court application. The debtor surrenders their assets to a Licensed Insolvency Trustee who then liquidates the assets to maximize recovery for the creditors.
Infinity Asset Solutions is a leader in the field of managing the liquidation of companies, receivership, bankruptcies, surplus equipment, and more. With over eight decades of collective experience, our professional services include conducting comprehensive equipment appraisals and audits as well as assisting with industrial equipment auctions via reputable market channels. Contact us today if you need assistance with facilitating an auction or a liquidation.
