
The liquidation analysis is central to every form of consumer bankruptcy. Yet too many attorneys think the formula is Assets minus Secured Debts minus Exemptions = Distributable estate Not by a long shot. So let's walk through the elements of a comprehensive liquidation analysis. You need it if you're assessing the vulnerability of assets to the trustee in a Chapter 7. It's one of the confirmation tests ("best interests of creditors") in Chapter 13. And it's critical if you're cramming down a Chapter 11 plan. Assets, tangible and intangible Tangible assets like homes and cars are easy to identify. A step less obvious, to your client at least, is money in the bank. And then there are legal rights that may be worth money, like interests in a probate estate, membership in a class action suit, or an employment-based claim. All of those things are assets. And unless you find an exception in 541, they become assets of the estate. But don't forget assets that may … [Continue reading...]