{"id":1342,"date":"2022-01-09T22:26:58","date_gmt":"2022-01-09T22:26:58","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=1342"},"modified":"2025-06-17T07:46:23","modified_gmt":"2025-06-17T06:46:23","slug":"receivership-and-liquidation","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/disputes-litigation\/receivership-and-liquidation\/","title":{"rendered":"What is the Difference Between Receivership and Liquidation?"},"content":{"rendered":"\n

When a company is struggling financially, they have several options available. One of those options is receivership and liquidation. This is particularly important if you are a secured creditor to a struggling or insolvent company<\/a><\/span> or business. This will determine how the company will repay you. This article will explain some key features of the receivership process and how liquidation fits into the process.<\/span><\/p>\n\n\n\n

What is Receivership?<\/span><\/h2>\n\n\n\n

Receivership is part of an insolvency process, where a company cannot pay its loans<\/a>. Receivership is usually specified in a legal charge within a secured loan agreement. A secured loan is simply a loan backed up with collateral in the case of insolvency. <\/span><\/p>\n\n\n\n

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Sometimes, a charge might contain a specific provision that accommodates for receivership happening very quickly. You should be aware of any clauses of this type, as they can sometimes catch the company or the creditors off-guard. <\/span><\/p>\n<\/div>\n\n\n\n

A creditor will be able to appoint a receiver, who can manage the company’s assets during a restructuring or insolvency process. <\/span>However, the receiver’s exact rights and obligations will depend on the agreement between the creditor, the receiver, and the company. Sometimes, you may also deal with court-appointed receivers. <\/span><\/p>\n\n\n\n

As part of their job in the insolvency process, the receiver will often have the power to collect and sell the assets as part of the secured loan agreement. For example, the receiver can take control of the company’s assets with the intent of realising a liquidation process. <\/span><\/p>\n\n\n\n

What is Liquidation?<\/span><\/h2>\n\n\n\n

Liquidation, sometimes called ‘winding up,’ is where a company’s assets are sold to pay off debts to creditors. There are two types of liquidation that a receivership process may invoke. These are:<\/span><\/p>\n\n\n\n