When an individual files a bankruptcy proceeding, all of the Debtor's assets become property of the bankruptcy estate pursuant to 11 U.S.C. 541. This can allow the Chapter 7 panel Trustee to step into the shoes of the Debtor as if the Trustee owns the asset. The Trustee can then offer the asset up for sale through a public auction or private sale. Proceeds from this bankruptcy asset sale are then used to make a distribution to unsecured creditors. This often occurs in circumstances involving minority ownership interests in limited liability companies.
This bankruptcy code mechanism can result in circumstances whereby unrelated third parties may purchase the asset from the Trustee.
The attorneys at Keller & Almassian, PLC have represented clients who have purchased assets from the Trustee and can help navigate this process for our clients.