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Bankruptcy

Bankruptcy. Jing Zhang. Reasons of Bankruptcy. Balance Sheet. Asset. Liability. Equity. Asset= Liability + Equity. Reasons of Bankruptcy. Individuals: Held Creditors In Finance Distress Companies Getting Finance Distress Voluntary & Involuntary ‘Discharge of Debts!’.

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Bankruptcy

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  1. Bankruptcy Jing Zhang

  2. Reasons of Bankruptcy BalanceSheet Asset Liability Equity Asset= Liability + Equity

  3. Reasons of Bankruptcy • Individuals: • Held Creditors • In Finance Distress • Companies • Getting Finance Distress • Voluntary & Involuntary ‘Discharge of Debts!’

  4. Ways of Bankruptcy • Chapter 7: Liquidation • Chapter 11: Reorganization (usually companies) • Chapter 13: Adjustment of Debts of an Individual With Regular Income

  5. Chapter 7 • ‘The chapter of the Bankruptcy Code providing for "liquidation," ( i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.)’ • Eligibility (Individual)

  6. Chapter 13 • ‘The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)’

  7. Chapter 11 • ‘The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership.’

  8. Process of Chapter 11 • Filing Bankruptcy to a Court • Debtor in possession or trustee • Creditor Committee • A plan of reorganization within 120 days • Accept/ Reject the plan • Approval from Court • New company

  9. How many companies filed Chapter 11 from 1997 to 2007 • Over 2000 • 1500~2000 • 1000~1500 • Less than 1000

  10. How many of them successfully emerged? • Over 300 • 250~300 • 200~250 • Less than 200

  11. Summary FilingBankruptcy Chapter 7 Liquidation Company ‘Dead’ CannotPayoffDebts Chapter 11 Reorganization InvoluntaryPetition Reject Plan ReorganizationPlan New Company New Plan Accept Plan

  12. Questions? Thank You

  13. Reference • EISENBACH, B. (2012, 05 24). Forced into bankruptcy: The involuntary bankruptcy process. Retrieved from http://bankruptcy.cooley.com/2012/05/articles/business-bankruptcy-issues/forced-into-bankruptcy-the-involuntary-bankruptcy-process/ • Liquidation under the bankruptcy code. (n.d.). Retrieved from http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspx • The bankruptcy process step-by-step. (n.d.). Retrieved from http://www.bankruptcylawhelp.com/Bankruptcy/Bankruptcy-Process.aspx • Reorganization under the bankruptcy code. (n.d.). Retrieved from http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter11.aspx • Individual debt adjustment. (n.d.). Retrieved from http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter13.aspx • U.S. Code Title 11 • “Emerging from Bankruptcy with When-Issued Trading,” Raymond M. Brooks and J. Jimmy Yang Financial review (The), vol.47, pp. 445-467, (August 2012).

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