Receivership vs judicial liquidation: what is the difference?
Receivership and liquidation are two insolvency procedures that both address cessation of payments, but with opposite aims: rescue the business, or wind it down and pay the creditors.
The difference in one sentence
Receivership aims to keep the business running when it is still viable; liquidation stops the business when recovery is manifestly impossible.
| Criterion | Receivership | Judicial liquidation |
|---|---|---|
| Condition | Cessation of payments + recovery possible | Cessation of payments + recovery manifestly impossible |
| Purpose | Continue the business, protect jobs | Realise assets, pay creditors |
| Activity | Continues (observation period) | Ends (except temporary continuation) |
| Director | Stays in office (assisted/supervised) | Divested in favour of the liquidator |
| Outcome | Continuation or sale plan | Closure (usually for insufficiency of assets) |
Is receivership required before liquidation?
No. The court orders judicial liquidation directly when recovery is manifestly impossible. There is no mandatory receivership step beforehand: it all depends on the viability found at opening.
Conversely, a receivership can be converted into liquidation along the way if the observation period shows continuation is no longer possible.
Frequently asked questions
Does receivership always end in liquidation?
No. It can lead to a continuation or sale plan. Conversion into liquidation only happens if the receivership fails.
For a creditor, does it change how to file a claim?
No: in both cases the claim is filed with the representative or liquidator within two months of BODACC publication.
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Get startedGeneral information, not legal advice. Always check the original BODACC notice and consult a professional for your case.