Contractor Information on Bureau Bankruptcy
Bankruptcy takes place when an individual or business is declared insolvent by a judge. The judge relieves the individual or establishment of financial obligations and forces them to give all assets to a court-appointed trustee. Many residential contractors resort to bankruptcy protection during economic recessions and depressions.
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Chapter 11 Bankruptcy Protection
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Chapter eleven bankruptcy is typically reserved for businesses, however, some individuals use it. The purpose of the protection is to allow businesses to reorganize and begin afresh without the financial burdens of contracts and other forms of agreement. While the court may appoint a trustee over assets, such action is deemed unnecessary if the establishment has not practiced fraud or gross mismanagement.
General Liability Policy
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A general liability policy is a form of insurance that may be taken out on property. The court considers such policy an asset during bankruptcy filing.
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Executory Contract
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Executory contracts are unsatisfied agreements between the bankruptcy filer and another business or establishment. During bankruptcy proceedings, the debtor could choose to either keep the agreement and pay accordingly, or terminate the contract and be free from financial obligations.
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References
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