Copyright The Law Office of Eric L. Crump, PLLC, 2007, All rights reserved
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THE LAW OFFICE OF
ERIC L. CRUMP, PLLC
ATTORNEY AND COUNSELOR AT LAW
____________________________________________________
THIS IS AN ADVERTISEMENT
WHAT HAPPENS TO MY
BUSINESS WHEN I FILE FOR
BANKRUPTCY?

Corporate Bankruptcy is the filing of Chapter 7 or
Chapter 11 by 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 to
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 reorganize or liquidate its assets through a
court-approved plan, approved by its creditors.

The trustee is empowered by the Bankruptcy Code to
recover money and property for the benefit of the
creditors in certain instances. These include:

Preferences - or payments made by the debtor to a
creditor on a past-due bill within 90 days immediately
prior to the bankruptcy  filing, and which gave that
creditor more  than he would have otherwise received in
the bankruptcy case. This "reach-back" period is
extended to one year if the creditor was a relative of the
debtor, or had an "insider" relationship with the debtor.
Preference law is designed to provide equal treatment to
creditors. The law also provides for certain defenses to
preferences.

Fraudulent Transfers - or transfers of money or property
by the debtor within one year before the  filing made with
the intent to hinder, delay and defraud creditors, or for
which the debtor did not receive fair value, made at a
time when the debtor was insolvent (debts exceeded
assets) or which resulted in the debtor becoming
insolvent.  

Strong-arm Powers - which allow a trustee to utilize the
available laws of the state where the  filing was made.
The trustee can often cancel security interests if not
perfected under state law, or have the benefit of a
longer "reach-back" period to set aside a fraudulent
transfer.



For more information concerning corporate bankruptcy
or other related legal matters in the Commonwealth of
Kentucky, Attorney Eric L. Crump is available for
consultation. To set up an appointment, please feel free
to call (502) 540-9958 or email at
ecrump@crumplawoffice.com.
WE ARE A DEBT RELIEF AGENCY – WE HELP
PEOPLE FILE FOR BANKRUPTCY RELIEF UNDER
THE BANKRUPTCY CODE
620 South Third Street, Louisville, Kentucky 40202
Phone: (502) 540-9958; Fax: (502) 540-9957
email: contact@crumplawoffice.com