Difference Between Receivership and Liquidation

In receivership, the owner of a company maintains a limited role in the debt restructuring process. Liquidation completely eliminates the roles of the owner and directors and operates without their input.

1. What is a receiver and liquidator?
2. What is the difference between going into administration and liquidation?
3. What is the difference between administrator and receiver?
4. What is liquidation?
5. What's the difference between liquidation and insolvency?
6. How long does it take from administration to liquidation?
7. What happens when administrators are called in?
8. How do receivers get paid?
9. What are the duties of a receiver?
10. Who appoints the Official Receiver?

What is a receiver and liquidator?

What happens when a court awards an equal division of the assets and the parties are unable to decide on how the assets are to be divided? The court has the general power to then nominate someone to collect, realise and divide the estate. Such a person is called a liquidator, receiver or curator.

What is the difference between going into administration and liquidation?

The primary difference between the two procedures is that company administration aims to help the company repay debts in order to escape insolvency (if possible), whereas liquidation is the process of selling all assets before dissolving the company completely.

What is the difference between administrator and receiver?

While administrators are appointed the court, an administrative receiver is called in by a bank or other creditor who has a charge over all or most of the assets of a company. The receiver's goal is to act in the interests of the holder of the charge.

What is liquidation?

Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due.

What's the difference between liquidation and insolvency?

Insolvency can be considered a financial “state of being”, when a company is unable to pay its debts or when it has more liabilities than assets on its balance sheet, this being legally referred to as “technical insolvency”. Liquidation is the legal ending of a limited company.

How long does it take from administration to liquidation?

There is no legal time limit on business liquidation. From beginning to end, it usually takes between six and 24 months to fully liquidate a company. Of course, it does depend on your company's position and the form of liquidation you're undertaking.

What happens when administrators are called in?

When a company enters administration the control of the company is passed to the appointed administrator (who must be a licensed insolvency practitioner). The administrator's primary goal is to leverage the company's assets to repay creditors as quickly and as fully as possible without preference.

How do receivers get paid?

The Receiver is paid from the assets placed in his or her custody, and the Receiver's fees have priority over other claims. Fees earned by the Receiver must be approved by the Court before they are paid, and typically are based upon rates and parameters set forth in the order of appointment.

What are the duties of a receiver?

(1) Upon appointment as receiver, the receiver shall take possession of the Corporation in order to wind up the business operations of the Corporation, collect the debts owed to the Corporation, liquidate its property and assets, pay its creditors, and distribute the remaining proceeds to stockholders.

Who appoints the Official Receiver?

Once the winding up petition is submitted to the court, the compulsory liquidation procedure begins. The Official Receiver may be appointed as a provisional liquidator by that very creditor who filed the petition.