QUESTIONS? 844.937.3268

       

Introduction to Chapter 7

Originally published: October 2013


In the course of business, some companies find themselves unable to pay their debts. For whatever reason this occurs, it threatens their continuance as a viable business entity. To assist corporations with these issues, most countries have in place some sort of process for liquidation and/or reorganization.

In the United States, federal bankruptcy law (Title 11) governs both of these situations. In this article we’ll cover the steps in the liquidation process. Next month, we’ll tackle reorganization.

Chapter 7 of Title 11 governs corporate liquidation – termination of the business and sale of its assets to repay creditors at least some portion of the debt incurred. In 2004, approximately 20,000 Chapter 7s were filed.