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Chapter 7 of the Bankruptcy Code governs
the liquidation process under the
bankruptcy laws of the United States.
When a distressed business is unable to
service its debt or pay its creditors,
the business or its creditors may file
for bankruptcy under Chapter 7. A
Chapter 7 filing requires the business
to cease operations unless and until it
is continued by the Chapter 7 Trustee. A
Trustee will be appointed by the federal
bankruptcy court to sell the company's
assets and distribute the proceeds to
the creditors. As a result of the
Chapter 7 proceeding, the bankrupt
entity will be dissolved.
Chapter 11 of the US Bankruptcy Code
permits a business to reorganize and
have its debts discharged. When a
business is unable to service its debt
or pay its creditors, the business or
its creditors can file for protection
under Chapter 11. In most Chapter 11
proceedings, the debtor remains in
control of its business operations as a
debtor in possession, but is subject to
the oversight and jurisdiction of the
bankruptcy court.
Chapter 13 bankruptcy filings are
available to individuals as a personal
relief from debt and to avoid
foreclosure and certain other
collections proceedings.
CONTACT US.
If you or your business is considering
filing
bankruptcy, or you would like to
learn more about your rights as a
creditor, please contact us here, or call
Hut
at 713.650.9700.
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