...passed a business sought bankruptcy bill with a 302-126 vote, while the Senate had passed it on March 10th, with a 74-25 vote. Bankruptcy reform was initially introduced in 1998, but had difficulty in getting passed until now. This bill is a huge victory for credit card companies and retailers, but will undoubtedly affect millions of Americans in a negative manner (www.onlin.wsj.com/20050415). The bill is the first major change to the bankruptcy laws in twenty-seven years (www.pbs.org/3.25.05). The bill will make it harder for consumers to eliminate their debt with the use of bankruptcy. There are now new restrictions and a “means-test”, which determine if consumers can have their debts erased by Chapter 7 bankruptcy or Chapter 13 bankruptcy. The bill also makes attorneys liable for any inaccuracies in their clients’ bankruptcy filings. This bill has several controversial issues associated with it and will be explained later, along with the actual provisions of the bill. To understand the controversy, one must first understand what bankruptcy is and the difference between Chapter 7 and Chapter 13 bankruptcy filings. Chapter 7 bankruptcy is a liquidation proceeding in which the debtor turns over all of their non-exempt property to a bankruptcy trustee who converts it to cash to pay off the creditors. Within four months, the debtor is usually relieved of all obligations. In many cases, the debtor has no assets to lose, so Chapter 7 gives the individual a relatively quick “fresh...
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...year 2012, bankruptcy filings totaled 40,075 for business filings, and 1,181,016 for non-business filings. This leads to a total of 1,221,091. In regards to non-business filings, of the 1,181,016, Chapter 7 bankruptcies accounted for 816,271, Chapter 11 accounted for 1,461, and Chapter 13 accounted for 363,280. Some interesting statistics to note are that total non business bankruptcies dropped from over 1.5 million in 2010 to just over 1.35 million in 2011, and as mentioned 2012’s non business bankruptcies totaled 1,181,016. It is a good sign for the economic recovery that bankruptcy declines have occurred for 2 straight years. The declines have also been consistently dropping between all 3 chapters. Chapter 7 non-business bankruptcy filings were 1,100,116 in 2010, the highest since 2005, however they dropped to nearly 800,000 in 2012. While the decline in non-business bankruptcies has not been so dramatic for chapter 11 and chapter 13, the numbers are still dropping from 2010’s total (American Bankruptcy Institute, 2014). The decline in bankruptcies shows signs that the number of businesses who are “buried in debt” is beginning to subside. The goals of modern bankruptcy law are to provide relief to these debtors who have excessive debt, and to provide a fair means of distributing a debtor’s assets among creditors. Attempting to find the right balance between the rights of the debtor and the rights of the creditor is thus the overall objective of modern bankruptcy law. One major...
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...Australian Bankruptcy Law Contents Executive Summary 2 History of Australian Bankruptcy Law 3 The Beginning 3 The English Root 3 The Adaption and the Bankruptcy Act of 1966 5 The Debate 6 The Reform 6 For the Change 6 Against the Change 6 Conclusions & Recommendations 7 Citations & References 8 Executive Summary The purpose of this report is to examine the history, and the development of the Australian Bankruptcy Law. Through reviewing historical information, the origins of the current Bankruptcy Law are explored. Furthermore, the development of Corporate Insolvency Laws in Australia from 1901 through to 2001 Corporations Act is studied. The last part of this report reviews the ongoing debate on the need to relax the Corporate Insolvency & Bankruptcy Laws, in order to encourage entrepreneurship. This is followed by a final conclusion on the topic of the Australian Bankruptcy Law, and recommendations on where it could head for the better. History of Australian Bankruptcy Law The Beginning Before examining the development of any laws in Australia, one must review and accept the irony that, Australia began as a nation of convicts. In the late 18th century, the British empire were being burdened by the increasing number of criminals, convicted of variety of crimes from petty theft, fraud, to even murder. Due to the limited landmass, King George III empowered Captain Arthur Phillip, commander of the First fleet, to sail out to Australia...
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...INTRODUCTION Bankruptcy is a legal status of an individual or someone who cannot pay back debts owed to creditors. Bankruptcy is mostly imposed by a court order, often initiated by the debtor. Bankruptcy is not the only legal status that an insolvent person or other entity may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries, including the United Kingdom, bankruptcy is limited to individuals, and other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. A creditor can file a bankruptcy petition to the High Court against a person or persons who have failed to repay debts. Under Section 6 of the Bankruptcy Ordinance, the amount of debt in a creditor's petition must be equal to or exceed a certain amount and must be unsecured. Other than the Creditor's Bankruptcy Petition (legal action commenced by creditors), debtors can also institute bankruptcy petitions against themselves (i.e. Debtor's Bankruptcy Petition). PROCEDURES INVOLED IN WINDING UP A COMPANY BASED ON BANKRUPTCY. Firstly, a liquidator is appointed either by the company shareholders passing resolution or by the court making an order, then liquidator collects the assets of the company and pays creditors in order to priority. The liquidator also distributes any surplus fund to the share holders and hence the company is then formally dissolved. In Reinsurance Australia Corporation Ltd v Odyssey Re (Bermuda) Ltd (2001) 36 ACSR 348;...
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...1-Dictionary defines bankruptcy as legally declared insolvency, or inability to pay creditors 2- Some people say that a company is called bankrupt if they failed to pay their loans on time; I say that if a company has assets then they should not be considered bankrupt since they can sell these assets and pay the people back. 3- there are some criteria in order to be called bankrupt Your income should be less than or equal to a certain amount You should not have applied for bankruptcy in the past 180 days. Clear Channel Communications Dictionary defines bankruptcy as legally declared insolvency, or inability to pay creditors, and the term bankrupt is derived from the Italian banca rotta, which means broken bank. There are two kinds of bankruptcy: One when the company itself or the individual declares it which is called voluntary bankruptcy, and one when creditors file a bankruptcy petition against a debtor which is called “involuntary bankruptcy”. Facts and Tools Question 1 A Question 4 A. Cyclical B. Structural C. Frictional Question 6 Insider who have jobs so they can have rights and making it harder for the company to fire them Thinking and problem solving Question 1 A) Rise B) Fall C) Fall D) Rise E) Stay the same Question 2 Net job creation= 5.25-5= 0.25 Total job destruction/net job creation= 5/0.25=20 So for each 20 job destructed one job are created Question 8 Of course the economist is right because he is an economist. The U.S government...
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...Bankruptcy prediction From Wikipedia, the free encyclopedia This article is an orphan, as few or no other articles link to it. Please introduce links to this page from related articles; suggestions may be available. (December 2009) Bankruptcy prediction is the art of predicting bankruptcy and various measures of financial distress of public firms. It is a vast area of finance and accounting research. The importance of the area is due in part to the relevance for creditors and investors in evaluating the likelihood that a firm may go bankrupt. The quantity of research is also a function of the availability of data: for public firms which went bankrupt or did not, numerous accounting ratios that might indicate danger can be calculated, and numerous other potential explanatory variables are also available. Consequently, the area is well-suited for testing of increasingly sophisticated, data-intensive forecasting approaches. Contents [hide] 1 History 2 Modern methods 3 References 4 External links [edit]History The history of bankruptcy prediction includes application of numerous statistical tools which gradually became available, and involves deepening appreciation of various pitfalls in early analyses. Interestingly, research is still published that suffers pitfalls that have been understood for many years. Bankruptcy prediction has been a subject of formal analysis since at least 1932, when FitzPatrick published a study of 20 pairs of firms, one failed and one...
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...Business Ethics and Crisis Management: Circumstances for a Second Chance Dr. Stefan MAYR Researcher at the Institut für Controlling und Consulting, Johannes Kepler Universität Linz, Austria Johannes Kepler Universität Linz Institut für Controlling und Consulting Altenberger Straße 69 4040 Linz Austria Stefan.mayr@jku.at Keywords: Corporate responsibility, corporate restructuring, enterprise crisis, bankruptcy 1238 Abstract Discourse regarding ethics and corporate responsibility arose in the last years linked with an increasing number of accounting fraud scandals. The recent financial crisis has had a lasting negative influence on corporate profits. Companies have had to satisfy the interests of several stakeholders, such as its employees, banks, customers and the community, and at the same time successfully manage the consequences of the crisis. An empirical qualitative study which was conducted in Austria in 2008 is presented in this paper aimed at investigating business ethics and crisis management. The stakeholder theory will be used as a reference framework. This paper concludes with lessons that can be learned and political recommendations and policies put forth to grant failed businesses a second chance. 1. Introduction In the past few years, an increasing number of fraud cases and accounting scandals is linked to fierce discourse with respect to ethics and corporate accountability. Business ethics has likewise become a current research subject in...
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...Bankruptcy Assignment Warren and Westbrook, The Law of Debtors and Creditors Sara Israelyan Spring Semester 2011 University of Minnesota Law School March, 2011 Warren and Westbrook, The Law of Debtors and Creditors Problems 8.1 Absent bankruptcy, what can Harv and Lois protect as the creditors begin to move in? What if they filed a Chapter 7? What could they protect if they lived in Cheyenne, Wyoming? When considering bankruptcy, pre-bankruptcy planning is one of the most important steps for Harv and Lois. In a Chapter 7 bankruptcy, the TIB will take all non-exempt valuable property that he can sell to distribute the money to the creditors. The main idea behind the Chapter 7 bankruptcy is ‘liquidation’. However, Harv and Lois can arrange their property and debt before filing for Chapter 7 bankruptcy, in order to maximize their exemptions. Generally, during a pre-bankruptcy planning, the debtor converts some of its non-exempt assets to exempts ones to save the property for creditors. In this case, usually the debtor sells or borrows against non-exempt property in order to buy exempt property. This right to maximize the exemptions however is not unlimited. After filing bankruptcy, all of Harv’s and Lois’s property, both real and personal, becomes a part of the bankruptcy estate. However, under the Bankruptcy Code, they are allowed to exclude certain property deemed necessary for everyday life and sustain a reasonable fresh start after discharge. Harv and Lois...
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...Do Bankruptcy Laws unjustly favor Lenders? Intro Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Bankruptcy law provides for the development of a plan that allows a debtor to resolve his debts through the division of his assets among his creditors. Although the goal of the modern bankruptcy is to allow the debtor to have a “fresh start,” and to be granted relief of some liability, there haven’t been any regulators to protect consumers or debtors since the first Bankruptcy Law that the Congress passed in 1797 which lead to imprisonment of thousands of debtors. And it wasn’t till 1841 that the debtor could voluntarily go into bankruptcy and so avail himself of this privilege of discharge. The Federal Bankruptcy Act of 1898 had 3 principal objects in view: 1. To prevent preferences and ensure equality in payment as between the creditors of insolvent debtors; 2. To punish and discourage commercial fraud; and 3. To discharge honest debtors from their debts when overwhelmed by financial misfortune through no fault of their own. The act gave creditors collectively full power over the administration of insolvent estates and placed upon them the responsibility for enforcement of the act. New Legislation The new Legislation enacted by Congress called the Bankruptcy Abuse and Consumer Protection Act was intended to make it more difficult for debtors to file a Chapter 7 Bankruptcy under which most...
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...rights to assure the securities’ transferability and rapid judicial resolution of claims for nonpayment.2 To further attenuate risk, investors insisted on foreign laws to govern substantive terms of the securities. By the late 1990s, as various Argentine issuers began defaulting on their obligations, these bondholder rights and protections were tested. It soon became apparent that bondholders were far more vulnerable than originally thought. Highly-publicized reorganization proceedings undertaken by Argentine bond issuers, including In re Central Términal Güemes S.A.3 and In re Supercanal S.A.4, illustrated procedural difficulties encountered by bondholders. Investors found themselves hampered in having their claims admitted by Argentine bankruptcy courts and in being represented as a group by a bondholder trustee or fiscal agent. No case, however, better illustrates the great divide between the expectations of foreign creditors and the outcome of an Argentine insolvency proceeding than In re Sociedad Comercial del Plata S.A.5 Of Counsel, Negri & Tejeiro Abogados (Buenos Aires, Argentina). The author wishes to give special thanks to Dr. Alejandro Breit for his invaluable help and patience in reviewing this article and to Stephanie de Moerloose for her comments and help with the more tedious tasks. This publication has been prepared solely for educational purposes. It provides general information and should not be used or taken as specific legal advice. For further information...
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...Research / Analysis # 2 Baker College 1. When reviewing the American Bankruptcy Institutes website I was researching the total number of bankruptcies in 2012, the total number of non-bankruptcies in 2012, and the total number of business bankruptcies in 2012. My findings concluded that the total number of bankruptcies in 2012 which consists of business and non-business fillings which includes the states and D.C. was 1,232,294 (ABI, 2013). The total number of non-business filings in the states and D.C. in 2012 was 1,232,294. The report shows that there were 811,789 non-business Chapter 7 filings and 352,553 non business Chapter 13 filings in 2012 (ABI, 2013). My reports also show that amongst the 57,527 business filings in 2012 that 7,760 filed for Chapter 11, 97,167 filed for chapter 7, 12,485 filed for Chapter 13, and 115 businesses filed for Chapter 15 (ABI, 2013). With the information provided we can conclude that more companies file for Chapter 7. Filing for Chapter 7 means that a business simply does not have the income to repay any portion of their debts. In this case many of the assets will have to be turned over, and this can make it hard for the business to continue to operate, and it may involve the liquidation of the business (All Law, 2013). Now chapter 13 came in second place with 12,485 filings, and with Chapter 13 this is usually the best option for businesses. There is no asset-sale in a Chapter 13, but businesses do need...
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...Chapter 25 Bankruptcy, Reorganization, and Liquidation ANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS 25-1 Bankruptcies occur in firms of all sizes. Small firms, with fewer creditors, are often able to work out informal settlements and thus avoid the time and expense of formal bankruptcy. Ross Corporation, described in Question 3, is probably too large, and it has too many creditors, to work out an informal settlement. If Ross attempted to resolve its problems informally, the attempt would probably fail, and then it would have to resort to the federal bankruptcy court. Note that if there had been fewer creditors, and particularly if most of the debt were owed to a few banks, then the chances of an informal resolution would be better. But with many holders of the publicly traded bonds, 15 banks, and 250 unsecured creditors, there would probably be too many holdouts to reach an informal resolution. 25-2 The judge in a federal bankruptcy proceeding can abrogate all contracts, including labor contracts. If a contract requires payments greater than the company’s cash flows can support, then the judge can order that payments be scaled back to a level the company can afford. Labor contracts were abrogated for a number of firms that were hit with asbestos suits, notably Johns Manville, and currently several airlines are in bankruptcy proceedings under which labor contracts will likely be changed. 25-3 a. As noted above, is probably too large, and it has too many creditors...
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...Mandich Co. had the following amounts for its assets, liabilities, and stockholders' equity accounts just before filing a bankruptcy petition and requesting liquidation: Of the salaries payable, $30,000 was owed to an officer of the company. The remaining amount was owed to salaried employees who had not been paid within the previous 80 days: John Webb was owed $10,600, Samantha Jones was owed $15,000, Sandra Johnson was owed $11,900, and Dennis Roberts was owed $2,500. The maximum owed for any one employee's claims for contributions to benefit plans was $800. Estimated expense for administering the liquidation amounted to $40,000. On a statement of financial affairs, what amount would have been shown as assets available to pay liabilities with priority and unsecured creditors? | | $390,000. | | | $445,000. | | | $495,000. | | | $660,000. | | | $795,000. | | | | A Chapter 7 bankruptcy is a(n) | | involuntary reorganization. | | | bankruptcy forced by a company's creditors. | | | liquidation. | | | bankruptcy in which all creditors receive payment in full. | | | voluntary reorganization. | On a statement of financial affairs, a specific liability may be classified as | | current or long-term. | | | secured or unsecured. | | | monetary or nonmonetary. | | | direct or indirect. | | | past due or not yet due. | On its balance sheet, a company undergoing reorganization should | | report its assets at...
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...Introduction A company is an entity that is treated as a legal person by the government. However, it is not as easy as it seems to operate a company. There are many challenges that companies face during the course of their operations. Depending on the degree of the problem, some companies are likely to wind up. Before understanding how a company can be wound up, it is important to understand how to form a company and what types of companies exist. Formation of a Company A company can be formed in numerous ways. To be specific, the main concentration shall be placed on formation of a company by registration. Registered companies are formed by registration under the Companies Act CAP 388. This is the most common way of forming a company. According to Section 13 of the Companies Act, There are two main types of companies; public company and private company. Private companies are divided into three different types. A private company limited by shares; a company limited by guarantee and an unlimited company. Types of Registered Companies A private company limited by shares, usually called a private limited company (Ltd.) has shareholders with limited liability and its shares may not be offered to the general public, unlike those of a public limited company (plc). It is a company whose liability to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company...
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...Submission on Personal Insolvency Bill 2012 to Joint Oireachtas Committee on Justice, Equality and Defence FLAC September 2012 About FLAC FLAC is an independent human rights organisation dedicated to the realisation of equal access to justice for all. FLAC Policy Towards achieving its stated aims, FLAC produces policy papers on relevant issues to ensure that government, decision-makers and other NGOs are aware of developments that may affect the lives of people in Ireland. These developments may be legislative, government policy-related or purely practice-oriented. FLAC may make recommendations to a variety of bodies drawing on its legal expertise and bringing in a social inclusion perspective. You can download/read FLAC’s policy papers at http://www.flac.ie/publications/policy.html For more information, contact us at FLAC, 13 Lower Dorset Street, Dublin 1 T: 1890 350250 / 01 874 5690 | E: info@flac.ie | W: www.flac.ie FLAC: Submission on Personal Insolvency Bill 2012 (September 2012) ___________________________________________________________________________________________ Please note: This submission is made for the purposes of the beginning of Committee Stage of the deliberations on the Personal Insolvency Bill. However, it is still very much a work-in-progress and FLAC intends to make further observations on the Bill as it proceeds through the parliamentary process and as its thinking on the legislation develops and evolves. Please see too our...
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