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Strategic Bankruptcy
A strategic bankruptcy may occur when an otherwise solvent company makes use of the bankruptcy laws for some specific business purpose other than simple inability to pay debts. Process In the U.S., Chapter 11 bankruptcy made it possible for a business to declare bankruptcy without actually being insolvent. It is also strongly weighted toward retaining the existing management through the process of restructuring, on the basis that the existing management would be most familiar with the business and thus best equipped to preserve as much of its value as possible. These two conditions laid the foundations for modern strategic bankruptcy. Strategic bankruptcy occurs where bankruptcy is a strategic choice rather than an unavoidable condition. Such a choice might be made to avoid or reduce heavy legal judgements, to sidestep existing contracts, or even as a tool for manipulative debt reduction. Under bankruptcy law, debts are not avoided entirely, but may be significantly reduced to th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Bankrupt is not the only legal status that an insolvent person may have, meaning the term ''bankruptcy'' is not a synonym for insolvency. Etymology The word ''bankruptcy'' is derived from Italian language, Italian , literally meaning . The term is often described as having originated in Renaissance Italy, where there allegedly existed the tradition of smashing a banker's bench if he defaulted on payment. However, the existence of such a ritual is doubted. History In Ancient Greece, bankruptcy did not exist. If a man owed and he could not pay, he and his wife, children or servants were forced into "debt slavery" until the creditor recouped losses through their Manual labour, physical labour. Many city-states in ancient Greece lim ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
General Motors Chapter 11 Reorganization
The 2009 General Motors Chapter 11 sale of the assets of automobile manufacturer General Motors and some of its subsidiaries was implemented through Chapter 11, Title 11, United States Code in the United States bankruptcy court for the Southern District of New York. The United States government-endorsed sale enabled the NGMCO Inc.GM 363 Asset Sale Approved by U.S. Bankruptcy Court July 6, 2009. Accessed September 8, 2012. ("New GM") to purchase the continuing operational assets of the old GM. Normal operations, including [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Strategic Default
A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt, despite having the financial ability to make the payments. This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house's price such that the debt owed is (considerably) greater than the value of the property—the property has negative equity or is ''underwater''—and is expected to remain so for the foreseeable future, such as following the bursting of a real estate bubble. Such borrowers are called ''walkaways''. The process of strategically defaulting on a home mortgage has been colloquially called ''jingle mail''—metaphorically, one mails the keys to the bank. An alternative is called ''extend and pretend'': The terms of the mortgage are modified to keep the borrower temporarily in the home, in the hope that the market price will improve, and that the house can be sold for the full loan ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Phoenix Company
A phoenix company is a successful Legal person, commercial entity which has emerged from the collapse of another through insolvency. Unlike "Bottom of the harbour tax avoidance, bottom of the harbour" and similar schemes that strictly focus on asset stripping, the new company is set up as a legal successor (business), legal successor, to trade in the same or similar trading activities as the former, and is able to present the appearance of "business as usual" to its customers. It has been described as "one that arises amidst or from the disarray and demise of its predecessor." A phoenix company may be classified either "innocent"/"bona fide" or abusive. Nature of phoenix activity Types of phoenix company operators A study by the Australian Securities and Investments Commission has identified three groups of operators that practice phoenix activity: Such activity can also be characterized as either "basic" (involving replacement of one entity by another) or "sophisticated" (which ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Debt Restructuring
Debt restructuring is a process that allows a private or public company or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations. Replacement of old debt by new debt when not under financial distress is called " refinancing". Out-of-court restructurings, also known as s, are increasingly becoming a global reality. Motivation Debt restructuring involves reduction of debt and an extension of payment terms and is usually less expensive than bankruptcy. The main costs associated with debt restructuring are the time and effort spent negotiating with bankers, creditors, vendors, and tax authorities. In the United States, small business bankruptcy filings cost at least $50,000 in legal and court fees, and filing costs in excess of $100,000 are common. By some measures, only 20% of firms survive Chapter 11 bankruptcy filings. Historically, debt restr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bankruptcy Reform Act Of 1978
The Bankruptcy Reform Act of 1978 (, , November 6, 1978) is a United States Act of Congress regulating bankruptcy. The current Bankruptcy Code was enacted in 1978 by § 101 of the Act which generally became effective on October 1, 1979. The current Code completely replaced the former Bankruptcy Act of 1898, sometimes called the "Nelson Act" (Act of July 1, 1898, ch. 541, ). The current Code has been amended multiple times since 1978. (''See, ''e.g.'' Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.'') This Act prohibits employment discrimination Employment discrimination is a form of illegal discrimination in the workplace based on legally protected characteristics. In the U.S., federal anti-discrimination law prohibits discrimination by employers against employees based on age, race, ... against anyone who has declared bankruptcy. See also * Bankruptcy Act References {{US-fed-statute-stub United States bankruptcy legislation 1978 in American law ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Moral Hazard
In economics, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs associated with that risk, should things go wrong. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs. A moral hazard may occur where the actions of the risk-taking party change to the detriment of the cost-bearing party after a financial transaction has taken place. Moral hazard can occur under a type of information asymmetry where the risk-taking party to a transaction knows more about its intentions than the party paying the consequences of the risk and has a tendency or incentive to take on too much risk from the perspective of the party with less information. One example is a principal–agent approach (also called agency theory), where one party, called an agent, acts on behalf of another party, called the principal. However, a principa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Pink Sheets LLC
OTC Markets Group, Inc. (formerly known as National Quotation Bureau, Pink Sheets, and Pink OTC Markets) is an American financial services corporation that operates a financial market providing price and liquidity information for almost 12,400 over-the-counter (OTC) securities. The group has its headquarters in New York City. OTC-traded securities are organized into three markets to inform investors of opportunities and risks: OTCQX, OTCQB and Pink. History The company was first established in 1913 as the National Quotation Bureau (NQB). For decades, the NQB reported quotations for both stocks and bonds, publishing the quotations in the paper-based Pink Sheets and Yellow Sheets respectively. The publications were named for the color of paper on which they were printed. NQB was owned by CCH from 1963 to 1993. In September 1999, the NQB introduced the real-time Electronic Quotation Service. The National Quotation Bureau changed its name to Pink Sheets LLC in 2000 and subs ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Phoenix Company
A phoenix company is a successful Legal person, commercial entity which has emerged from the collapse of another through insolvency. Unlike "Bottom of the harbour tax avoidance, bottom of the harbour" and similar schemes that strictly focus on asset stripping, the new company is set up as a legal successor (business), legal successor, to trade in the same or similar trading activities as the former, and is able to present the appearance of "business as usual" to its customers. It has been described as "one that arises amidst or from the disarray and demise of its predecessor." A phoenix company may be classified either "innocent"/"bona fide" or abusive. Nature of phoenix activity Types of phoenix company operators A study by the Australian Securities and Investments Commission has identified three groups of operators that practice phoenix activity: Such activity can also be characterized as either "basic" (involving replacement of one entity by another) or "sophisticated" (which ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Chapter 11, Title 11, United States Code
Chapter 11 of the United States Bankruptcy Code ( Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, whether organized as a corporation, partnership or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, though liquidation may also occur under Chapter 11; while Chapter 13 provides a reorganization process for the majority of private individuals. Chapter 11 overview When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11. In Chapter 7, the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. Any residual amount is returned ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Kmart (United States)
Kmart ( ), formerly legally registered as Kmart Corporation, now operated by Transformco, is a department-store chain and online retailer in the United States and Territories of the United States, its territories. It operates four remaining Kmart Big-box store, big-box department stores — three in the US Virgin Islands and one in Tamuning, Guam. The company closed its last big-box store in the mainland United States in 2024. A smaller location remains open in the former garden centre, Garden Shop of its Kendale Lakes, Florida, Kendale Lakes, Florida (Miami postal address) store, while the adjoining big box building is occupied by another retail chain that has leased the space. Before 2018, Kmart owned and operated a much larger chain of its namesake stores. The company is headquartered in Hoffman Estates, Illinois, United States. The company was incorporated in 1899 as S. S. Kresge Corporation and renamed Kmart Corporation in 1977. The first store with the Kmart name opened i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
