What is the purpose of Chapter 7 of the U.S. Bankruptcy Code? What are some of the characteristics of ventures that use Chapter 7 instead of private liquidation?
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What is the purpose of Chapter 7 of the U.S. Bankruptcy Code? What are some of the characteristics of ventures that use Chapter 7 instead of private liquidation? |
Verified Answer
The purpose of Chapter 7 is to liquidate all of the venture's assets and shutting down the venture because Chapter 7 specifies the rules and regulations of the venture's dissolution.
The ventures choose Chapter 7 over private liquidation because it allocates the assets among the claimants fair and equitably. It also prevents the management team of the venture from purchasing the venture's assets fraudulently. And after liquidating the venture with help of Chapter 7, an entrepreneur walks away from the venture without any debt obligations, which means after the liquidation entrepreneur will be not liable for any debt obligation.
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