What is “asset recovery” in a Chapter 11 bankruptcy?

Asset recovery in a Chapter 11 bankruptcy is the process of identifying and recovering value from a debtor’s assets. This means that creditors receive a portion of the value of the assets of the debtor in order to satisfy a debt owed to them. In many cases, the assets recovered may also be used to pay off additional unsecured debts and other claims. The Chapter 11 bankruptcy process allows a debtor to restructure or reorganize their debts. This is done by allowing them to create a plan to pay off the debt. This plan must be accepted by the court and the creditors. If the plan is accepted, the debtor is granted a discharge from their debts and then the creditors’ claims are assigned a payment priority. In some cases, the debtor may be able to use asset recovery to pay off creditors’ claims at a higher priority. Asset recovery typically occurs several months into the bankruptcy case. The debtor must prove that they have a viable business plan in order for their assets to be recovered. The court must make a determination that the plan is beneficial to the creditors. If the court approves the plan, then the assets of the debtor can be liquidated and the proceeds used to pay off the creditors according to the payment priority established in the court-approved plan. In Florida, asset recovery is regulated by the US Bankruptcy Code, which is enforced by the Bankruptcy Court. The Bankruptcy Court has the authority to approve or reject the plan and the asset recovery process. This process should only be attempted with the help of an experienced attorney.

Related FAQs

What is “asset recovery” in a Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts