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nottheSEC (71.99)

Corp Bankruptcy101 to stop confusion: Illegal, Immoral, Secured, Unsecured,Actionable, Stock holders,, CHP 7,11

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June 09, 2009 – Comments (3) | RELATED TICKERS: H , ELP , FUL

Just trying to help and present in a civil tone and from my understanding ... All best ...J

Illegal: there is nothing illegal about filing bankrupcy 

Immoral: It may be immoral for a corp to not pay bond holders. I sincerely feel bad for bond holders especially those who held a companies debt for years.By the law they are given first consideration but are unsecured creditors  st

Secured Creditors: Generally a a bank or an entity that owns collateral  Accordiong to the SEC "..the credit that they extend is usually backed by collateral, such as a mortgage or other assets of the company. They know they will get paid first if the company declares bankruptcy"

Unsecured Creditors - such as  suppliers and bondholders, have the next claim.

Stockholders -Again right frorm the SEC" owners of the company, have the last claim on assets and may not receive anything if the Secured and Unsecured Creditors' claims are not fully repaid"

Actionable:describing  the process of the right of any creditor to assert his claim

Chapter 7: the company stops all operations and goes completely out of business. A trustee is appointed to "liquidate" (sell) the company's assets and the money is used to pay off the debt, which may include debts to creditors and investors.

Chapter 11 A bankrupt company, the "debtor," might use Chapter11 of the Bankruptcy Code to "reorganize" its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.

http://www.sec.gov/investor/pubs/bankrupt.htm

 

 

3 Comments – Post Your Own

#1) On June 09, 2009 at 5:26 PM, nottheSEC (71.99) wrote:

the point is that while shutting out bondholders is usually immoral usually is not illegal but is actionable.

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#2) On June 10, 2009 at 9:32 AM, wrparks (62.99) wrote:

Nice post.  The way I understand things, the bondholders are  rarely completely shut out and only in situations where the secured creditors exhaust the entire asset base.  I think. 

The way I see things, it's not a question of what bankruptcy means.  I think it is a question of whether it is proper (or legal?) for the government to intercede late in the game and become a secured creditor.  I don't think it is or was proper, but suspect it was and is completely legal.

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#3) On June 10, 2009 at 10:17 AM, nottheSEC (71.99) wrote:

Yeah exactly in my opinion it is improper mostly but their is no better option.The argument seems similar to emminent domain.   

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