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Legal Eagle
Legal Eagle, Attorney
Category: Bankruptcy Law
Satisfied Customers: 396
Experience:  General practice, including bankruptcy for 19 years.
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I really want to know..I used to work for a company that filed

Customer Question

I really want to know..I used to work for a company that filed for chapter11. Since then they have had a company called Patriach Partners (Lynn Tilton) supposedly buy them out (through a process called the stalking horse). Now the court has moved their case into Chapter7. Apperantly Lynn has moved all the assets to the new company and left the creditors to fight over whats left with the old company. Can she do this? I mean how can she just move all these assets and leave the creditors with scraps.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Legal Eagle replied 7 years ago.

When a petition for relief (a form that starts a bankruptcy case) is filed with the bankruptcy court, all of the debtors assets are within the control of the court. In order to sell or transfer assets of a bankruptcy estate, court approval is required and the creditors are notified and have a right to object. If the sale is allowed, the proceeds from the sale are still within the control of the court. Transfering the assets or selling the assets without the necessary court approval makes the transfer void and ineffective. A conversion of the case to a chapter 7 would still require court approval before the assets are sold or transferred.