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Unformatted text preview: ng class and that the plan doesn’t unfairly discriminate against them. If the debtor does so, the plan is crammed down the nonconsenting class and approved. For example, the United Airlines plan was crammed down the retired pilots, who voted against it. 28 Liquidation in Bankruptcy (Chapter 7) The liquidation of a bankrupt firm usually occurs once the bankruptcy court has determined that reorganization is not feasible. A petition for reorganization must normally be filed by the managers or creditors of the bankrupt firm. If no petition is filed, if a petition is filed and denied, or if the reorganization plan is denied, the firm must be liquidated. 29 Liquidation in Bankruptcy Process When a firm is adjudged bankrupt, the judge may appoint a trustee to perform the many routine duties required in administering the bankruptcy. The trustee takes charge of the property of the bankrupt firm and protects the interest of its creditors. A meeting of creditors must be held between 20 and 40 days after the bankruptcy judgment. At this meeting, the creditors are made aware of the prospects for the liquidation. The trustee is given the responsibility to liquidate the firm, keep records, examine creditors’ claims, disburse money, furnish information as required, and make final reports on the liquidation. In essence, the trustee is responsible for the liquidation of the firm. Occasionally, the court will call subsequent creditor meetings, but only a final meeting for closing the 30 Duties of Trustee Duties of Trustee Trustee in liquidation cases The overarching duty of the trustee is to collect and liquidate the property of the estate and to distribute the proceeds to creditors. The trustee's specific statutory duties, as set forth in Section 704 of the United States Bankruptcy Code, include the following: To collect and reduce to money the property of the estate and close the estate as expeditiously as compatible with the best interests of the parties in interest; To be accountable for all property received; To ensure that the debtor performs his or her intention as to retaining or surrendering property of the estate that secures consumer debt; Duties of Trustee Duties of Trustee To invest...
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