A receivership is a proceeding which the receiver is appointed over one or all assets of the subject person or entity. Receiverships can be either a state or federal proceeding. By its very nature, a receivership is an involuntary process. Typically it is a secured creditor which seeks appointment of a receiver. Receivers may operate a company or liquidate assets, or both. A receiver may be appointed over a specific asset (limited receivership), or all assets of the subject person or entity (general receivership). A receiver may opt to file a bankruptcy case during the course of administration.
In many states where the appointment of a receiver is authorized by statute, there are is not a comprehensive act or set of procedural rules which governs receiverships (as there is with bankruptcy, for example). In those states, receivership law has developed through the common law as courts have issued decisions on receivership issues. The absence of clear legal authority provides some uncertainty, but also flexibility, to receiverships. Because states vary widely in the trustee's ability to act without court approval on any given issue, there may be great variances in how receivers in different states administer their estates. Accordingly, it is important to negotiate the specific terms of sale with each different receiver. As with any sale, buyers are presumed to have done their own "due diligence" regarding the asset prior to bidding on that asset.