Issue link: https://mbozikis.ufcontent.com/i/1422521
190 VII. LIQUIDATION (CHAPTER 7) A. Generally Although liquidation of a debtor's assets can be (and often is) accomplished under other Chapters of the Bankruptcy Code, Chapter 7, which applies to both entities and individuals, is most commonly used in such a scenario. In addition to the general liquidation provisions, Chapter 7 also contains specific provisions applicable only to the liquidation of stockbrokers, commodity brokers and clearing banks. Like a Chapter 11 reorganization proceeding, a Chapter 7 proceeding can be commenced by the filing of a bankruptcy petition with a bankruptcy court either voluntarily by a debtor or involuntarily against a debtor by a group of creditors. Furthermore, as discussed above in Chapter VI.I.2., a Chapter 7 case can also occur via conversion of a Chapter 11 proceeding to Chapter 7. 106 B. The Chapter 7 Trustee One of the main differences between Chapter 7 and the other Chapters of the Bankruptcy Code is that in a Chapter 7 liquidation, a third party trustee is automatically appointed to oversee and administer the estate. Thus, for example, in the case of a corporation, existing management is displaced and the trustee and its advisors take over. 1. Appointment and Election of Trustee Promptly upon the filing of a voluntary Chapter 7 proceeding (or entry of the order for relief in an involuntary proceeding), the U.S. Trustee is required to appoint an interim trustee to protect the debtor's assets and administer the case, including, as necessary, to operate the debtor's business pending the appointment of a 106 As discussed in more detail below, in Chapter VIII.H., a Chapter 13 case may also be converted to a Chapter 7 case. 11 U.S.C. ยง 1307.