Typically initiated when a company or individual is in financial distress, such as insolvency, and is unable to meet their financial obligations. A court will appoint a receiver to manage the property, business, or assets of a company or individual. The main objective of a receivership is to protect and preserve the assets, maximize their value, and distribute the proceeds to creditors and other stakeholders in accordance with legal priorities.
Individuals or businesses unable to repay their outstanding debts can seek relief from some or all of their financial obligations. The primary goal of bankruptcy is to provide a fresh start to the debtor while ensuring fair treatment to creditors. The different types of bankruptcy include: Chapter 7, Liquidation; Chapter 11, Reorganization; Chapter 13, Wage Earner’s Plan.
An alternative to bankruptcy where an insolvent company transfers its assets to a third party (the assignee), who then sells the assets and distributes the proceeds to the company's creditors. This process is usually quicker and less formal than bankruptcy and can be a more flexible and cost-effective way to liquidate the assets of a troubled business.
