I know that sales and transfers of assets will be scrutinized by the Bankruptcy COurt, but is it permitted prior to filing? Lets say clients have buyers lined-up for items. Can the claimant sell the assets to provide liquidity to pay debts and continue to run the business? Or must he let the assets sit so that he doesnt create the appearance of impropriety?

I need to be careful as to how i advise the client.

all sales must be at arms-lenght otherwise the court court claim fraud or concealment.

So, if its arms-length and not the subject of a suit you may be ok.

According to the Fraudulent Transfer Acts:

Transfers made by a debtor are fraudulent, whether the creditor's claim arose before or after the transfer was made, if the debtor made the transfer with actual intent to hinder, delay, or defraud any creditor.

When determining actual intent, consideration may be given, among other factors, to whether you:

1. Transferred the asset to an insider;
2. Retained possession or control of the property transferred after the transfer;
3. Disclosed or concealed the transfer;
4. Were sued or threatened with suit before the transfer;
5. Transferred all of your substantial assets;
6. Absconded (departed secretly);
7. Removed or concealed assets;
8. Received value reasonably equivalent to the value of the asset transferred;
9. Were insolvent or became insolvent shortly after the transfer was made;
10. Transferred the asset shortly before or shortly after a substantial debt was incurred; and
11. Transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.