Under Part XI of the Bankruptcy and Insolvency Act, a receiver is a person who takes possession or control of all or substantially all of an insolvent person’s or bankrupt’s business property, either through a court appointment under s. 243(1) or through certain qualifying private or statutory appointments.
How the Bankruptcy and Insolvency Act Defines a Receiver
The statutory definition appears in s. 243(2) of the Bankruptcy and Insolvency Act. It is broader than the common shorthand of a “court-appointed receiver.” A receiver may be appointed by the court under s. 243(1), but the definition can also include a person appointed under a security agreement, or under another qualifying federal or provincial court order, to take possession or control of all or substantially all of the business property described in the Act.
That distinction matters because the source of the receiver’s authority affects how the receivership is conducted. A court-appointed receiver exercises the powers granted by the appointment order and remains subject to court supervision. In Ontario, the Superior Court of Justice also has authority under s. 101 of the Courts of Justice Act to appoint a receiver or receiver and manager where it appears just or convenient, and Rule 41 of the Rules of Civil Procedure governs important aspects of that appointment.
A receiver is therefore not simply a collection agent acting for a lender. Depending on the form of appointment, the receiver may take control of assets, preserve property, operate or stabilize a business, collect receivables, investigate transactions, conduct a sale process, report to the court or stakeholders, and deal with proceeds in accordance with the governing legal priorities and court orders.
What Does a Receiver Actually Do?
The practical role of a receiver depends on the appointment and the property involved.
Court-appointed receiver. A secured creditor may seek an appointment under BIA s. 243(1), subject to the statutory requirements. The court defines the receiver’s powers in the appointment order. The procedure and contested issues surrounding that remedy are addressed in ME Law’s Appointment of Receiver Litigation practice.
Receiver and manager. An appointment may authorize the receiver not only to take control of assets but also to manage or continue the business. Under Ontario Rule 41.03, the order should state whether the receiver is also appointed as manager and, where necessary, define the scope of those managerial powers.
Privately appointed receiver. Certain security agreements may permit a secured creditor to appoint a receiver without first obtaining a court appointment. A private receiver derives authority principally from the security agreement and applicable legislation rather than from a court appointment order. Court-appointed and private receiverships therefore should not be treated as legally identical.
Duties after appointment. Under BIA s. 247, a receiver must act honestly and in good faith and deal with the insolvent person’s or bankrupt’s property in a commercially reasonable manner. Other statutory obligations can include reporting and accounting requirements. Disputes may arise over whether the receiver has remained within the authority conferred by the governing documents or court order. ME Law’s Scope of Receiver Powers Disputes practice addresses litigation over those boundaries.
Receivership is also different from bankruptcy. A receiver is generally concerned with taking control of specified business property and preserving or realizing its value under the authority that created the receivership. Bankruptcy involves a separate statutory process and a trustee in bankruptcy with a different mandate. A receivership can occur without a bankruptcy, although the two processes may also operate alongside one another.
Why the Source of the Receiver’s Authority Matters
When a dispute develops, the label “receiver” is only the starting point. The more important questions are who appointed the receiver, what property falls within the appointment, what powers were granted, and what statutory or court-imposed duties govern the receiver’s conduct.
For a court-appointed receiver, the appointment order is particularly important. It may authorize possession and control of assets, continuation of business operations, borrowing, retention of professionals, investigation, sale processes, reporting, or applications back to court for advice and directions. The existence of a receivership does not give the receiver unlimited authority; the receiver must act within the legal framework governing the appointment.
Those distinctions can affect secured creditors, the debtor company, shareholders, guarantors, employees, landlords, purchasers and other stakeholders differently. Questions about creditor priorities, asset sales, receiver reports, fees and court directions are therefore addressed separately throughout this Receivership FAQ category rather than being collapsed into the basic definition.
How ME Law Approaches Receivership Disputes
ME Law approaches receivership disputes by first identifying the source and limits of the receiver’s authority: the Bankruptcy and Insolvency Act, the Courts of Justice Act where applicable, the security documents and—most importantly in a court appointment—the actual appointment order. That analysis often determines what the receiver may control, what steps require further court approval, and what remedies may be available to secured creditors, debtors, shareholders, guarantors or other stakeholders.
In contested matters, we also examine the evidentiary record, the receiver’s reports and proposed relief, and any effect on creditor priorities or ongoing operations. ME Law’s broader Receivership, Insolvency and Bankruptcy Litigation practice addresses disputes arising from appointment through enforcement, realization and court-supervised resolution.
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