Filing Facts

Filing of Chapter 7 or Chapter 11 Corporations and Partnerships

On the filing of a Chapter 7 petition, the court appoints a trustee. The trustee’s primary duty is to sell the assets of the bankruptcy estate, and then make distributions to creditors. The trustee’s commissions and other administrative expenses are paid first, followed by payment of priority debts (often taxes), and then general unsecured creditors on a pro rata basis.

In most Chapter 7 cases, the debtor’s business operations either had already ceased as of the filing, or stop once the case is filed. In some cases, to preserve an entity’s “going concern” value, the court permits the trustee to operate the business.

In Chapter 11, on the other hand, the business typically remains in operation, with the debtor retaining control as a debtor in possession. The debtor in possession is given the same rights and duties as a trustee. The goal of the Chapter 11 is to re-organize or liquidate its assets through a court-approved plan, approved by its creditors.

Need help with a Small Business Bankruptcy? The Lawyers of Custer Roberson can help. With our team of bankruptcy attorneys in the North Denver Metro area we are conveniently located. Call us at 303 893-0833 today.

 
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