receivership

receivership

[ri-see-ver-ship]

In law, state of being in the hands of a receiver, a person appointed by the court to administer, conserve, rehabilitate, or liquidate the assets of an insolvent corporation for the protection or relief of creditors. It is a legal solution to a financial difficulty; it does not necessarily entail the termination of the corporate charter. Seealso bankruptcy, insolvency.

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Receivership is used to denote a situation in which an institution or enterprise is being held by a receiver.

United States

Several regulatory entities have been granted power by the Congress to place banking and financial institutions into receivership. The Office of the Comptroller of the Currency for failing nationally-chartered commercial banks, the Office of Thrift Supervision for Savings and loan associations (thrift institutions), and the Federal Housing Finance Agency (FHFA), for government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac and the 12 Federal Home Loan Banks. Most individual states also have granted receivership authority to their own bank regulatory agencies, and insurance regulators.

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