In the event of selling a portion of a company’s assets, a cooperative to secure bankruptcy costs, shall the funds be deposited into the account of the Court or the liquidator?

September 12, 2023

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In the intricate landscape of bankruptcy proceedings, the question of where funds from the sale of a company’s assets or cooperative property should be deposited to secure bankruptcy costs emerges as a pivotal issue. It delves into the financial mechanics of bankruptcy and the allocation of resources to ensure the effective resolution of these complex cases. Understanding the procedure for handling these funds and determining the custodian—whether the Court or the liquidator—plays a crucial role in maintaining transparency and accountability. In this exploration, we will navigate the legal framework and principles governing the depositing of funds from asset sales, shedding light on the significance of this aspect within the broader context of bankruptcy proceedings.

Question:

In the case of selling a part of the assets of an enterprise or cooperative to ensure bankruptcy costs, is the amount of money deposited into the account of the Court or the Receivership?

Answer:

Law on Bankruptcy does not regulate which account the Court uses to manage the proceeds from the sale of assets of the enterprise or cooperative to cover bankruptcy costs. However, according to Point (b), Clause 2, Article 38 of the Law on Bankruptcy, within 15 days from the date of receiving the notice of advance payment for bankruptcy costs, the requesting party must “deposit the advance payment for bankruptcy costs into the account opened by the People’s Court at a bank.” Therefore, when selling the assets of an enterprise or cooperative to secure bankruptcy costs, a similar provision should apply. In this case, the Court would transfer the proceeds from the sale of assets to the account specified in Point (b), Clause 2, Article 38 mentioned above.

Conclusion

In conclusion, the allocation and depositing of funds from the sale of a company’s assets or cooperative property to secure bankruptcy costs are essential components of the bankruptcy process. Deciding whether to place these funds in the Court’s account or entrust them to the liquidator significantly affects the efficiency and transparency of bankruptcy proceedings. Furthermore, this topic underscores the importance of adhering to established legal norms and practices to ensure the fair and just resolution of bankruptcy cases. Finally, it represents a vital aspect of the legal system’s commitment to upholding the integrity of bankruptcy proceedings and safeguarding the interests of all parties involved.

HMLF is always available to offer assistance in understanding the procedures with authorities.