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How does a Massachusetts business 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 Massachusetts business bankruptcy attorneys at Esher Rossi will discuss your financial restructuring options. Our business bankruptcy lawyers serve all of Massachusetts including downtown Boston, the Greater Boston MetroWest region, Cape Cod and the cities of Boston, Cambridge, Cape Cod, Framingham, LowellNewton, and Worcester.

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