Business Bankruptcy - Chapter 7 (Liquidation)
When a business is deeply in debt and unable to service that debt or pay its creditors, it may file for bankruptcy in a federal court under Chapter 7. The business ceases operations unless they are continued by the Chapter 7 Trustee, who is appointed almost immediately by the court. With broad powers to examine the business's financial affairs, the Trustee generally sells all the assets and distributes the proceeds to the creditors. When a very large company enters Chapter 7 Bankruptcy, entire divisions of the company may be sold intact to other companies during the liquidation.
Once all assets of the corporate or partnership debtor have been fully administered, the case is closed. The debts of the corporation or partnership theoretically continue to exist until the expiration of the applicable statutory periods of limitations.
Fully secured creditors, such as collateralized bondholders or mortgage lenders, have a legally enforceable right to the collateral securing their loans or to the equivalent value, which is not affected by a bankruptcy. A creditor is fully secured if the value of the collateral for its loan to the debtor equals or exceeds the amount of the debt and is not entitled to participate in any distribution of liquidated assets.
If you have any questions, please contact Tony at (347) 464-8277 or tony@amvasslaw.com.
Once all assets of the corporate or partnership debtor have been fully administered, the case is closed. The debts of the corporation or partnership theoretically continue to exist until the expiration of the applicable statutory periods of limitations.
Fully secured creditors, such as collateralized bondholders or mortgage lenders, have a legally enforceable right to the collateral securing their loans or to the equivalent value, which is not affected by a bankruptcy. A creditor is fully secured if the value of the collateral for its loan to the debtor equals or exceeds the amount of the debt and is not entitled to participate in any distribution of liquidated assets.
If you have any questions, please contact Tony at (347) 464-8277 or tony@amvasslaw.com.