Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
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.