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Divestiture is the partial or full disposal of an asset by a company or government entity through sale, exchange, closure, or bankruptcy. Divestiture can either be voluntary or court ordered. Examples of divestitures include selling intellectual property rights, and corporate acquisitions and mergers.

Some common uses of the term “divestiture” in a legal sense include:

  • In the context of a court’s jurisdiction in a bankruptcy matter, cases such as this one from New York, explain that “divestiture doctrine provides that the filing of an appeal divests the lower court of its control over the issue or matter that is on appeal.”
  • In the context of military law, divestiture defense provides that misconduct on the part of the superior in dealing with a subordinate divests the superior of their authority and no longer affords the superior a protected status. 

[Last updated in July of 2021 by the Wex Definitions Team]