Tenant Insolvency: What Happens When the Wrong Goods are Sold?

Occasionally we do not receive any assistance from the debtor in determining which assets, if any, do not belong to them. The BIA allows for a person who claims any property in the possession of the Trustee to file a proof of claim. The form of “property claim” is provided for in the BIA and must be supported by an affidavit. When no property claims have been submitted, the Trustee may dispose of all assets on the premises.

If it is subsequently discovered that property that was not property of the bankrupt, was sold without notice to the trustee, the trustee’s liability is limited to the amount realized from the sale of the property.

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