Court-appointed receiver

The Office of the Superintendent of Bankruptcy describes receivership as what happens when a company fails to pay debts it owes to secured creditors and those creditors appoint an administrative receiver who then takes over management of all or part of its assets. The Office adds that the receiver may also sell the company’s assets, parts of it or the whole company to recover the money owed.

How the appointment works

Section 243(1) lets a court, on application by a secured creditor, appoint a receiver if it considers it just or convenient. The receiver may take possession of all or substantially all of the inventory, accounts receivable or other property of an insolvent person or bankrupt that was acquired for or used in relation to a business, exercise any control over that property and the business that the court considers advisable, or take other action the court considers advisable. Where a notice is to be sent under section 244(1), section 243(1.1) bars an appointment before the expiry of 10 days after the creditor sends it, unless the debtor consents to earlier enforcement or the court considers an earlier appointment appropriate.

What to ask

• To see the appointment order, because it sets what the receiver may do.
• Whether the sale needs court approval. See approval and vesting order.
• How the process works in practice: see buying a business in receivership.