Mr Cooper Group Inc (COOP)

[David West]

Chapter 11 Liquidations:

Chapter 11 plans may provide for the liquidation of assets. A typical situation for a liquidation would be one where a business has relatively little value as a going concern but there are sufficient assets so it makes sense to sell off the assets to pay the creditors. In Chapter 11 bankruptcy, there is a liquidating “trust” where assets are sold individually and the proceeds are put in the trust for distribution to creditors. Unlike a Chapter 7 liquidation where the trustee gathers and sells non-exempt assets, Chapter 11 liquidations are controlled by the business owner. The theory is that the business owner is in a better position to get the most value for the sale of business assets. A Chapter 11 can convert to a Chapter 7 for liquidation, but there are many reasons why a Chapter 11 debtor prefers the liquidating trust. The debtor may be able to do a better job liquidating the assets because it knows the market for his assets and believes that it will get more money through a gradual asset sale than could a Chapter 7 trustee who is not familiar with the business or the market for business assets. If there is any money left after liquidation and payments to creditors, that money would go back to the debtor business or its equity holders.

http://www.alperlaw.com/bankruptcy/chapter-11-bankruptcy/chapter-11-debtor-creditor/