Liquidating assets before bankruptcy
In a Chapter 7 bankruptcy, known as liquidation bankruptcy, consumers are able to erase certain debt and start over on a fresh financial footing.
During the bankruptcy, the trustee generally gathers all of the consumer's assets and determines which ones qualify for liquidation.
Therefore, I won’t discuss that topic here; other than to say that in a personal Chapter 7 bankruptcy the debtor keeps the exempt assets, while the Chapter 7 Trustee seizes and liquidates the nonexempt assets for the benefit of creditors.
When the smoke all clears the debtor ceases to exist, which is why a business is ineligible for a Chapter 7 discharge pursuant to 11 U. I have already written about exempting assets many times — , the September 16, 2011 post.
However, there can be a liquidation component to the case.
I am pleased to report that although the title of Chapter 7 in the Bankruptcy Code is “Liquidation,” no individual debtors are liquidated in a Chapter 7 bankruptcy.
If you are living overseas you can still become bankrupt.
The first is an out-of-court workout, which, if successful, would allow the business to continue to operate without court supervision.Your assets in New Zealand become the property of the Official Assignee.If you have assets outside of NZ, the Official Assignee may have your NZ bankruptcy recognised in the overseas country and may deal with those assets also.Once liquidated, the proceeds go to pay off the consumer's creditors.
However, determining which assets qualify for liquidation gets tricky.
The form of the workout is limited only by the creativity of the business and the willingness of the creditors to work with the business.