Business Bankruptcy: Executive Summary - Need to Know Bankruptcy Concepts

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The following is an executive summary of the “need to know” bankruptcy concepts as they impact creditors in business insolvencies.

CHAPTER 11 vs. CHAPTER 7 -

- Chapter 11 is technically used for bankruptcy reorganizations, while Chapter 7 applies to liquidations. Chapter 11 and Chapter 7 can apply to either business or individual bankruptcies.

- Chapter 11 has been increasingly used as a tool to liquidate business assets as a “going concern”, hence the frequent “liquidating 11”. By contrast, in a Chapter 7 liquidation, the appointed trustee is not permitted to operate the business, except in rare circumstances. Accordingly, any going concern value can be achieved only through a “liquidating” Chapter 11.

Please see full article below for more information.

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Topics:  Chapter 11, Chapter 7, Commercial Bankruptcy

Published In: Bankruptcy Updates, Civil Procedure Updates, Civil Remedies Updates, General Business Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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