What distinguishes receivership from liquidation?

Receivership is a legal process involving the appointment of a receiver to manage a debtor's assets. One of the key characteristics of receivership is that it may allow the business to continue operating, at least in the short term, while the receiver works to restore financial order or facilitate the sale of the business. The main aim of a receivership is often to recover as much debt as possible for creditors without necessarily shutting down the business entirely.

In contrast, liquidation is a more definitive process in which a company is dissolved, and its assets are sold off to pay debts, ultimately leading to the closure of the business. Thus, option B effectively highlights this fundamental aspect of receivership, where there can be opportunities for restructuring and ongoing operations, rather than an immediate cessation of all business activities.

The other options do not correctly capture the essence of receivership versus liquidation. For example, receivership doesn’t always lead to business closure, nor is it reserved exclusively for solvent companies, as it can also apply to insolvent ones. Additionally, liquidation does not inherently provide tax benefits, as it primarily focuses on asset distribution and debt settlement rather than tax implications.