This section is from the book "Business Finance", by William Henry Lough. Also available from Amazon: Business Finance, A Practical Study of Financial Management in Private Business Concerns.
A far wiser and less wasteful method than bankruptcy proceedings for handling the condition of insolvency in most large corporate enterprises, consists of addressing a petition to a court of equity for the appointment of a receiver to carry on the business under the supervision of the court, until some plan of reorganization is worked out. The petition is referred to in some jurisdictions as a "bill in chancery." It may be presented by any one of four parties: (1) by the corporation itself; (2) by the stockholders of the corporation; (3) by the secured creditors; (4) by the unsecured creditors.
Applications from the corporation itself or from its own stockholders are rare, and are still more rarely granted. Applications from creditors who are friendly toward the corporation are frequently presented, however, and in such cases the court is often requested to appoint one of the officers, or some one else close to the management, as receiver. "Friendly receiverships," as these arrangements are known, are not always warmly favored by the bondholders and other creditors who are usually somewhat suspicious of the management that is responsible for involving the company in financial diff-culties.