Receivership Theory

Receivership theory refers to a legal framework where a court appoints a neutral third party, called a receiver, to manage and oversee a distressed organization or asset. This often occurs in situations like bankruptcy, where the receiver is responsible for preserving the value of the entity, paying off debts, and facilitating the sale or restructuring of assets. The receiver acts in the best interest of creditors and stakeholders, aiming to ensure fair treatment and maximize recovery, often stepping in when the original management is deemed unable to fulfill its duties effectively.