Q: In a corporate CH7 liquidation are shareholders listed? Most publications imply no and no notice is given either
A: Shareholders are not usually creditors of a corporation, thus they would not be listed. If for some reason a shareholder provided a loan to the corporation, or was personally liable for a debt of the corporation, then of course, that shareholder would be included in the list of creditors.
In a corporate Chapter 7 liquidation, shareholders may not necessarily be listed or given notice. This is because, in a Chapter 7 bankruptcy, the assets of the corporation are liquidated to pay off creditors, and shareholders typically have no priority in the distribution of assets.
However, it is important to note that the treatment of shareholders in a Chapter 7 bankruptcy may vary depending on the specific circumstances of the case. In some cases, shareholders may be entitled to a portion of the assets of the corporation after all creditors have been paid. This is more likely to occur if the corporation has significant assets or if the shareholders have secured interests in specific assets of the corporation.
It is also possible that shareholders may receive notice of the bankruptcy and the liquidation proceedings, although this is not always required. In some cases, shareholders may be informed of the bankruptcy and the liquidation proceedings through public filings or other means, such as communications from the bankruptcy trustee.
In any case, it is important for shareholders to understand their rights and obligations in a Chapter 7 bankruptcy. If you are a shareholder in a corporation that is undergoing Chapter 7 liquidation, it may be advisable to consult with a bankruptcy attorney who can help you understand the implications of the bankruptcy for your interests and help you navigate the legal process.
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