Chapter 11 Bankruptcy Liquidation

Bankruptcy liquidation can result if you are filing certain types of bankruptcy and either the type you are filing dictates liquidation of assets as part of the proceedings or where the trustee orders liquidation. A trustee may order liquidation or reversal in the case where an individual transferred assets just prior to bankruptcy.

What Is Chapter 11?

Chapter 11 allows for reorganization of debt. It allows a debtor to continue a business or retain assets while reducing overall debt. This type of bankruptcy is not the kind usually associated with bankruptcy liquidation. Chapter 11 is available to all business entities no matter how they are organized. A sole proprietor, partnership or corporation can file for chapter 11. It is less commonly used by individuals, but is available to them. An attorney can advise you of whether Chapter 11 is the best filing for your situation.

Occasionally, a company will liquidate under Chapter 11 if the officers feel they can get more for assets for some reason. An attorney can assist your business with strategies for debt reorganization.

Chapter 7

Chapter 7 is used by business which are ceasing operations. Liquidation of assets is commonly required in such situations. Chapter 7 generally absolves the business entity of debts and the liquidated assets are used to pay the bankruptcy trustee, attorney's fees and prioritized creditors.

Creditors Rights

Your creditors have the right to object to your bankruptcy petition as to valuation of assets or discharge of particular debt. You should be prepared for objections and respond to them in a timely manner. Both debtors and creditors have the right to propose a repayment plan to the court. This is part of the process of Chapter 11. Your attorney can also work with creditors on your behalf to come to a restructuring agreement. All agreements should be in writing to ensure your creditor does not sue you.

Liquidation of Assets

Bankruptcy resulting in liquidation is not commonly associated with Chapter 11. A debtor may chose to liquidate some or all assets within the bankruptcy time frame, or the court or creditors may request liquidation of specific assets depending on the debtors overall financial situation.

Getting Legal Help

If you are considering bankruptcy, you will be well served by discussing your financial situation with an experienced bankruptcy attorney. An attorney familiar with your state and federal bankruptcy law can help you make the best decision to ease the financial pressure you are facing.