When the seller has received notice of a bankruptcy petition, what should they avoid doing?

• A. Do not complete with the buyer
• B. Seek to assign the contract
• C. Seek dissolution of the sale
• D. Delay completion

Answer: (A)

When a bankruptcy petition has been served on the buyer, the buyer’s rights and assets become subject to the bankruptcy process and the trustee gains control over them. Completing the sale at that moment transfers ownership and the proceeds to someone whose ability to keep them can be challenged or undone by the trustee. To protect the seller’s position, the prudent course is to avoid completing with the buyer while the bankruptcy is unresolved, since the transaction could later be set aside or reversed in the estate. Waiting for the petition to progress or seeking alternative arrangements may be safer, but completing now risks loss or reversal of the deal.