Similarly, jewelry store operator Christian Bernard filed for chapter 7 bankruptcy just after Christmas in 2008, as did the U. Often, however, a case is converted from chapter 11 to chapter 7 where the administrative costs of chapter 11 have resulted in a scenario in which general unsecured creditors are likely to receive little or no distribution.
Unlike a chapter 11 liquidation, in which the debtor's management remains in control of the business during the liquidation process, in a chapter 7 bankruptcy case, an independent trustee is automatically appointed at the outset of the case.
Among the requirements for confirmation of a plan is that administrative priority creditors be paid in full.
In the event that insufficient funds exist to pay administrative creditors, the case is referred to as being "administratively insolvent." Administratively insolvent cases are typically converted to chapter 7.
Chapter 7 Liquidations In addition to chapter 11 liquidations, some prominent companies have filed for chapter 7 relief at the outset.
While many people are familiar with the concept of a "bankruptcy liquidation," the structure of a liquidation in bankruptcy may vary depending upon the specific type of case.The liquidator typically prices products close to retail at the start of a GOB sale, with prices reduced periodically throughout the sale term until all the inventory is sold.In some cases, liquidators are permitted to "augment" the existing store inventory with other goods.Most often, these sales are administered by an "agent" hired by the debtor that guarantees the estate a certain percentage of the cost value of the debtor's inventory, with a higher recovery possible depending upon the ultimate results of the sales.Several companies may bid at auction for the right to be the debtor's GOB agent.