A Receivership usually occurs when a secured creditor seeks to recover amounts outstanding under a secured loan that is in default. The loan agreement with the borrower normally sets out the definition of a default and the type of security and assets over which the Receiver will have control. This is known as a privately appointed Receivership. Sometimes the Receiver can be appointed by the court, such as in shareholder disputes in which the Receiver takes directions from the court and has generally broader responsibilities to all creditors and shareholders, rather than to just to the appointing lender.
The Receivers role is usually to take control of either an entire business (known as a Receiver/ Manager) or just specific assets, and liquidate them for the benefit of the secured lender. Payment to the secured lender would be made after paying the fees and costs of the Receiver and the payment of any prior ranking statutory or crown claims.
The appointment of a Receiver often occurs in conjunction with the appointment of a Trustee in Bankruptcy. The same firm may act as Trustee in Bankruptcy and Receiver, but often different firms are appointed to these roles.