Chapter 11 liquidating trustee

05-Oct-2019 12:56

Upon its confirmation, the plan becomes binding and identifies the treatment of debts and operations of the business for the duration of the plan.If a plan cannot be confirmed, the court may either convert the case to a liquidation under chapter 7, or, if in the best interests of the creditors and the estate, the case may be dismissed resulting in a return to the status quo before bankruptcy.Chapter 11 is a chapter of Title 11 of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States.Chapter 11 bankruptcy is available to every business, whether organized as a corporation, partnership or sole proprietorship, and to individuals, although it is most prominently used by corporate entities.

In order to be confirmed over their objection the plan must not discriminate against that class of creditors, and the plan must be found fair and equitable to that class.

Chapter 11 usually results in reorganization of the debtor's business or personal assets and debts, but can also be used as a mechanism for liquidation.

Debtors may "emerge" from a chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy.

In Chapter 7, the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. In Chapter 11, unless a separate trustee is appointed for cause, the debtor, as debtor in possession, acts as trustee of the business.

Any residual amount is returned to the owners of the company. Chapter 11 affords the debtor in possession a number of mechanisms to restructure its business.

In order to be confirmed over their objection the plan must not discriminate against that class of creditors, and the plan must be found fair and equitable to that class.

Chapter 11 usually results in reorganization of the debtor's business or personal assets and debts, but can also be used as a mechanism for liquidation.

Debtors may "emerge" from a chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy.

In Chapter 7, the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. In Chapter 11, unless a separate trustee is appointed for cause, the debtor, as debtor in possession, acts as trustee of the business.

Any residual amount is returned to the owners of the company. Chapter 11 affords the debtor in possession a number of mechanisms to restructure its business.

Appointment of a trustee requires some wrongdoing or gross mismanagement on the part of existing management and is relatively rare.