Us Bankruptcy Court
Of all the vicissitudes that life throws up at us, like long periods of unemployment or disability or illness with heavy medical bills, a death in the family, consumer credit that has been over extended, divorces with extensive credit, business losses and huge amounts of unexpected expenses, some of which may end in bankruptcy, because life is so uncertain, some experts feel that filing for bankruptcy is one of the smartest choices one can make in the circumstances.
This is why bankruptcy courts are so important to make things easier and legally binding for all concerned. A voluntary bankruptcy is a case where the bankruptcy proceedings are set rolling by the debtor himself and an involuntary bankruptcy is one where the case is set in operation by creditors, maybe three or more of them with non-contingent, unsecured claims, with these claims not subject to any bona fide disputes. They may put the debtors non-exempt property into liquidation or sale to get the benefit of the proceeds.
In the U.S. those who take the responsibility of selling bankruptcy estates or assets have to first approach the bankruptcy court for approval before selling those assets to third parties. For this purpose the court needs notices to be given to all the creditors and all interested parties to each individual bankruptcy case, while it is no longer necessary today to notify or inform the general public about a bankruptcy sale.
There are private sales and public sales of bankruptcy estates or assets and even in private sales, notice of at least twenty days should be given to creditors and other interested parties, before the sale is to be approved, though the above mentioned length of time can be shortened if necessary. Interested parties or creditors can put in higher bids or object to the sale if they feel like it. If the qualifying bids are more than one, the bidder who wins is established by a round of auction style bidding or through the process of sealed bids with the final round taking place before the court although it may
also be held in the offices of the counsel of the trustee or debtor who is in possession of the bankruptcy estate or assets or any such convenient place.
In a public sale also, the trustee or debtor in possession has to get authorization from the bankruptcy court to employ the auctioneer who has to manage the sale and when the court has okayed the method of sale, any further authorization from the court is not deemed necessary. These public sales are managed by the auctioneer who is employed by the trustee or the debtor-in-possession. Assets have to be authorized by the bankruptcy court to be sold on a definite date or period in time to come and many of the bankruptcy assets sold are sold on the as is where is with no warranties implied or stated basis with the buyer not being able to get a refund of his money if he is not satisfied with the condition of the asset that he bought.
However, if he is not happy with the asset that he bought, he can approach the bankruptcy professional who supervises the sale and if the professional is not able to meet his needs, he can approach the bankruptcy court in charge of that bankruptcy case. He can also file a case at his local court but it will probably be shifted to the bankruptcy court which has authorized the sale of the concerned asset and many bankruptcy courts will judge in favor of the bankruptcy professional because bankruptcy assets are sold on an as is where is with no warranties implied or stated basis.
Bankruptcy sales are also subject to any existing liens and encumbrances and the one who buys the asset has to meet or satisfy the existing lien before taking charge of the asset. Also the one who buys the asset is expected to inquire about the all the pros and cons of buying the particular asset and exercise due diligence in this matter before he bids for that particular asset. Some bankruptcy assets are received with a guarantee that they are free and clear of all liens and encumbrances and the bankruptcy professional in such cases will hold the money received from such sales and redeem or pay off any liens that are existing on the authorization of the bankruptcy court. Usually the one who buys the asset will be given a court order authorizing the sale if the asset is sold free and clear of all liens and encumbrances.
Usually, bankruptcy sales of real property like land or timeshares are undertaken without insurance or after taking the help of a title agency and these real estate assets will be sold on an as is where is with no warranties implied or stated, subject to any liens and encumbrances basis. So the one who buys the property has to exercise due diligence and inquire about the property beforehand, even before he bids for the property, and will only be given abankruptcy trustees deed once the sale is done with. The one who buys the property has also got to bear the expenses of recording and transferring the property to his name without getting any help from the bankruptcy professional. The bankruptcy professional will also not pay for the expenses of hiring a title agency whether wholly or in part if the one who buys wants to pay the title agency for its assistance.
Personal property can also be sold by a bankruptcy professional and is often sold as is where is with the one who buys it being in charge of the removal and transfer of ownership of the property sold and the expenses in transferring such ownership are to be met by him. In normal practice, the one who buys the property can inquire with the bankruptcy professional about all the terms and conditions of the sale and bankruptcy sales can be a lifeline to those who are in dire straits financially.
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