When Does Receivership Come Into Play?

When Does Receivership Come Into Play?

Some of the best careers in public administration relate to receivership. Basically, when your company faces financial problems and cannot meet its obligations and is about to or actually enters bankruptcy, then you might institute a receivership. The receiver has custodial responsibility for your company’s assets, both tangible and intangible, and performs the necessary duties. Receivers might be appointed by the court or the government, or you might privately appoint your own receiver.

In What Situations Does a Receivership Occur?

Receiverships might occur during insolvency, or when a business is unable to pay its necessary expenses, debts and other financial obligations. In this type of receivership, the receiver might have power over most or all of the components of a business. However, in some situations, the receiver might have limitations to his or her power. Receivership might also come into play when the person or business is unable to manage their own affairs due to some type of incapacitation, which might include mental health problems. Governmental seizure of a business or property might also require the services of a receivership.

What Does a Receiver Do?

The receiver’s duties include managing the company in a way that maximizes the value of all assets to raise funds, which might also include selling part or all of the company. They might also downsize and streamline the company to remove areas that are not profiting appropriately to save the company money. They also might secure or realize the company’s assets.

What Can You Expect?

Receivership proceedings can happen quite quickly, and generally, the creditor has the power to set things in motion to get paid. In some situations, the company is able to come back from receivership, but in many cases, it is a lost resort for an insolvent company and it only helps to clear as much debt as possible.

Your company should have an IRS-EIN-Tax-ID. You can verify an EIN number by clicking the link. If you need one, we can help you to apply for a federal tax ID number. Contact IRS EIN Tax ID Filing for more information.