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The trustee\u2019s responsibility is to sell the non-profit\u2019s assets, including property and equipment, at fair market value. The proceeds are then distributed to creditors following a priority schedule established by the Bankruptcy Code, where secured creditors are paid first. Once the assets are distributed, the non-profit ceases to exist; while its debts are not formally discharged, the organization becomes defunct with no means to pay remaining obligations. Most organizations report their assets in order of liquidity\u2014i.e., how easy it would be to turn them into cash if necessary.<\/p>\n<\/p>\n
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One advantage to the transferee (i.e., the receiving entity, or sometime a buyer) in an asset transfer is that such nonprofit avoids taking on the transferor nonprofit\u2019s liabilities. Consolidations are preferred when the participant entities want a proverbial fresh start \u2013 sometimes due to branding considerations, relational aspects, or political factors between the organizations. In a merger, and as may be set forth with specificity in the plan of merger, the programs, activities, operations, and other affairs of the disappearing entity may continue in and through the surviving entity. The plan of merger may provide that members, directors, The Key Benefits of Accounting Services for Nonprofit Organizations<\/a> officers, and the employees of disappearing entities will receive roles within the new organization.<\/p>\n<\/p>\n