Bankruptcy & Administrative Consolidation

Bankruptcy occurs when an indebted individual or company is forced to sell all available assets to pay back creditors when it becomes apparent that the debts will never be paid in full. Administrative consolidation is a means of streamlining the process.

Administrative Consolidation

Administrative consolidation, or joint administration, is the process of combining two or more bankruptcy cases. The cases themselves are not altered, but are simply combined so that a single court order can apply to all of them.

Application

For bankruptcy cases to be consolidated, federal law requires that the case originate in the same court. The cases can be petitions from multiple creditors regarding the same individual, or they can be petitions regarding individuals who are related financially, such as a husband and wife or business partners.

Considerations

Administrative consolidation is not used in every instance of relevant cases in a given court. The court must rule that the consolidation won't cause conflicts for the different creditors. For example, the cases of a husband and wife who no longer live together and have entirely different creditors would likely not be consolidated.

References

• Cornell University Law School: Federal Rules of Bankruptcy Procedure