Chapter
7 bankruptcy is commonly referred to as "liquidation," meaning that the
business assets are liquidated, or sold, to pay the debts of the
business. In this type of bankruptcy, a trustee is appointed by the
court to oversee the process and make sure that creditors are treated
equitably.
The
assets are sold and divided between creditors, after the fees and costs
of the trustee are paid. Chapter 7 bankruptcy usually signifies the end
of a business.
