Chapter 7 bankruptcy

A U.S. liquidation process in which a trustee administers and sells estate assets and distributes proceeds under applicable rights and priorities. Operations generally cease, although limited continued operation may be court-authorized.

Chapter 7 bankruptcy in round numbers

Hypothetical: an eligible U.S. business enters Chapter 7. A trustee administers its estate and realizes assets. Secured creditors’ recoveries depend on their collateral rights and proceeds; expenses and other priorities also matter. Equity receives only any residual after applicable claims, not a guaranteed recovery.

Source: U.S. Courts: Chapter 7 basics.

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