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

Asset recovery in a Chapter 11 bankruptcy is the process of recovering and liquidating assets to pay off debt. This type of bankruptcy is suitable for businesses that want to remain in operation, as reorganization of the debts is possible. The goal of asset recovery is to "maximize the value of the estate," meaning to obtain as much money as possible from the assets to use towards paying off the debts. In a Chapter 11 bankruptcy, the debtor is allowed to hold on to some or all of their assets while restructuring their debts. During this process, the debtor works with creditors to determine how much of the debt will be paid off and when. At the same time, the debtor will also attempt to maximize the value of their assets. This is done through asset recovery. Asset recovery involves liquidating any assets that are not necessary for the debtor’s business to continue operating. These assets are sold and the proceeds go towards paying off the debt. Any assets that are not liquidated are placed into a trust to be used as collateral for future payment. In short, asset recovery in a Chapter 11 bankruptcy is the process of selling and liquidating assets to help pay off debt. These assets are put into a trust to secure payment of the remaining debts. Asset recovery helps businesses to stay in business while also paying off their debts.

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

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