Chapter 7

In the United States of America, Chapter 7 refers to the proceedings that provide for liquidation of a business. Even though describing the proceedings of liquidation is not the primary goal of this work, liquidation is always an option that needs to be considered, especially during the Diagnostic Review Stage.

When a company decides to pursue the Chapter 7 option, its assets are placed in the hands of an appointed bankruptcy trustee. This trustee liquidates the assets for the best price available and distributes them to the creditors.43 In comparison, Chapter 11 proceedings have the goal of reviving the business, often through reorganization.


43 (Branch & Hugh, 1992, p. 3)