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Bankruptcy | United States Courts

About Bankruptcy

Filing bankruptcy can help a person by discarding debt or making a plan to repay debts. A bankruptcy case normally begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity.

All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code.

There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code.

Bankruptcy Basics provides detailed information about filing.

Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. Individuals can file bankruptcy without a lawyer, which is called filing pro se. Learn more.

Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company (LLC). Sole proprietors must use the forms that are numbered in the 100 series.

If you need help finding a bankruptcy lawyer, the resources below may help. If you are unable to afford an attorney, you may qualify for free legal services.

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Bankruptcy | United States Courts

Bankruptcy – Wikipedia

ArgentinaEdit

In Argentina the national Act “24.522 de Concursos y Quiebras” regulates the Bankruptcy and the Reorganization of the individuals and companies, public entities are not included.

In Australia, bankruptcy is a status which applies to individuals and is governed by the federal Bankruptcy Act 1966.[14] Companies do not go bankrupt but rather go into liquidation or administration, which is governed by the federal Corporations Act 2001.[15]

If a person commits an act of bankruptcy, then a creditor can apply to the Federal Circuit Court or the Federal Court for a sequestration order.[16] Acts of bankruptcy are defined in the legislation, and include the failure to comply with a bankruptcy notice.[17] A bankruptcy notice can be issued where, among other cases, a person fails to pay a judgment debt.[18] A person can also seek to have himself or herself declared bankrupt by lodging a debtor’s petition with the “Official Receiver”,[19] which is the Australian Financial Security Authority (AFSA).[20]

To declare bankruptcy or for a creditors petition to be lodged, the debt owed must be at least $5,000.[18]

All bankrupts are required to lodge a Statement of Affairs document with AFSA, which includes important information about their assets and liabilities. A bankruptcy cannot be annulled until this document has been lodged.

Ordinarily, a bankruptcy lasts three years from the filing of the Statement of Affairs with AFSA.[21]

A Bankruptcy Trustee (in most cases, the Official Receiver) is appointed to deal with all matters regarding the administration of the bankrupt estate. The Trustee’s job includes notifying creditors of the estate and dealing with creditor inquiries; ensuring that the bankrupt complies with his or her obligations under the Bankruptcy Act; investigating the bankrupt’s financial affairs; realising funds to which the estate is entitled under the Bankruptcy Act and distributing dividends to creditors if sufficient funds become available.

For the duration of their bankruptcy, all bankrupts have certain restrictions placed upon them. For example, a bankrupt must obtain the permission of his or her trustee to travel overseas. Failure to do so may result in the bankrupt being stopped at the airport by the Australian Federal Police. Additionally, a bankrupt is required to provide his or her trustee with details of income and assets. If the bankrupt does not comply with the Trustee’s request to provide details of income, the trustee may have grounds to lodge an Objection to Discharge, which has the effect of extending the bankruptcy for a further five years.

The realisation of funds usually comes from two main sources: the bankrupt’s assets and the bankrupt’s wages. There are certain assets that are protected, referred to as “protected assets”. These include household furniture and appliances, tools of the trade and vehicles up to a certain value. All other assets of value will be sold. If a house or car is above a certain value, the bankrupt can buy the interest back from the estate in order to keep the asset. If the bankrupt does not do this, the interest vests in the estate and the trustee is able to take possession of the asset and sell it.

The bankrupt will have to pay income contributions if his or her income is above a certain threshold. If the bankrupt fails to pay, the trustee can issue a notice to garnishee the bankrupt’s wages. If that is not possible, the Trustee may seek to extend the bankruptcy for a further five years.

Bankruptcies can be annulled prior to the expiration of the normal three-year period if all debts are paid out in full. Sometimes a bankrupt may be able to raise enough funds to make an Offer of Composition to creditors, which would have the effect of paying the creditors some of the money they are owed. If the creditors accept the offer, the bankruptcy can be annulled after the funds are received.

After the bankruptcy is annulled or the bankrupt has been automatically discharged, the bankrupt’s credit report status will be shown as “discharged bankrupt” for some years. The maximum number of years this information can be held is subject to the retention limits under the Privacy Act. How long such information will be present on a credit report may be less depending on the company issuing the report, but the report must cease to record that information based on the criteria in the Privacy Act.

In Brazil, the Bankruptcy Law (11.101/05) governs court-ordered or out-of-court receivership and bankruptcy and only applies to public companies (publicly traded companies) with the exception of financial institutions, credit cooperatives, consortia, supplementary scheme entities, companies administering health care plans, equity companies and a few other legal entities. It does not apply to state-run companies.

Current law covers three legal proceedings. The first one is bankruptcy itself (“Falncia”). Bankruptcy is a court-ordered liquidation procedure for an insolvent business. The final goal of bankruptcy is to liquidate company assets and pay its creditors.

The second one is Court-ordered Restructuring (Recuperao Judicial). The goal is to overcome the business crisis situation of the debtor in order to allow the continuation of the producer, the employment of workers and the interests of creditors, leading, thus, to preserving company, its corporate function and develop economic activity. It’s a court procedure required by the debtor which has been in business for more than two years and requires approval by a judge.

The Extrajudicial Restructuring (Recuperao Extrajudicial) is a private negotiation that involves creditors and debtors and, as with court-ordered restructuring, also has to be approved by courts.[22]

Bankruptcy, also referred to as insolvency in Canada, is governed by the Bankruptcy and Insolvency Act and is applicable to businesses and individuals, for example, Target Canada, the Canadian subsidiary of the Target Corporation, the second-largest discount retailer in the United States filed for bankruptcy in January 15, 2015, and closed all of its stores by April 12. The office of the Superintendent of Bankruptcy, a federal agency, is responsible for overseeing that bankruptcies are administered in a fair and orderly manner by all licensed Trustees in Canada.

Trustees in bankruptcy, 1041 individuals licensed to administer insolvencies, bankruptcy and proposal estates and are governed by the Bankruptcy and Insolvency Act of Canada.

Bankruptcy is filed when a person or a company becomes insolvent and cannot pay their debts as they become due and if they have at least $1,000 in debt.

In 2011, the Superintendent of bankruptcy reported that trustees in Canada filed 127,774 insolvent estates. Consumer estates were the vast majority, with 122 999 estates.[23] The consumer portion of the 2011 volume is divided into 77,993 bankruptcies and 45,006 consumer proposals. This represented a reduction of 8.9% from 2010. Commercial estates filed by Canadian trustees in 2011 4,775 estates, 3,643 bankruptcies and 1,132 Division 1 proposals.[24] This represents a reduction of 8.6% over 2010.

Some of the duties of the trustee in bankruptcy are to:

Creditors become involved by attending creditors’ meetings. The trustee calls the first meeting of creditors for the following purposes:

In Canada, a person can file a consumer proposal as an alternative to bankruptcy. A consumer proposal is a negotiated settlement between a debtor and their creditors.

A typical proposal would involve a debtor making monthly payments for a maximum of five years, with the funds distributed to their creditors. Even though most proposals call for payments of less than the full amount of the debt owing, in most cases, the creditors will accept the deal, because if they do not, the next alternative may be personal bankruptcy, where the creditors will get even less money. The creditors have 45 days to accept or reject the consumer proposal. Once the proposal is accepted by both the creditors and the Court, the debtor makes the payments to the Proposal Administrator each month (or as otherwise stipulated in their proposal), and the general creditors are prevented from taking any further legal or collection action. If the proposal is rejected, the debtor is returned to his prior insolvent state and may have no alternative but to declare personal bankruptcy.

A consumer proposal can only be made by a debtor with debts to a maximum of $250,000 (not including the mortgage on their principal residence). If debts are greater than $250,000, the proposal must be filed under Division 1 of Part III of the Bankruptcy and Insolvency Act. An Administrator is required in the Consumer Proposal, and a Trustee in the Division I Proposal (these are virtually the same although the terms are not interchangeable). A Proposal Administrator is almost always a licensed trustee in bankruptcy, although the Superintendent of Bankruptcy may appoint other people to serve as administrators.

In 2006, there were 98,450 personal insolvency filings in Canada: 79,218 bankruptcies and 19,232 consumer proposals.[25]

The People’s Republic of China legalized bankruptcy in 1986, and a revised law that was more expansive and complete was enacted in 2007.

Bankruptcy in Ireland applies only to natural persons. Other insolvency processes including liquidation and examinership are used to deal with corporate insolvency.

Irish bankruptcy law has been the subject of significant comment, from both government sources and the media, as being in need of reform. Part 7 of the Civil Law (Miscellaneous Provisions) Act 2011[26] has started this process and the government has committed to further reform.

The Parliament of India in the first week of May 2016 passed Insolvency and Bankruptcy Code 2016 (New Code). Earlier a clear law on corporate bankruptcy did not exist, even though individual bankruptcy laws have been in existence since 1874. The earlier law in force was enacted in 1920 called the Provincial Insolvency Act.

The legal definitions of the terms bankruptcy, insolvency, liquidation and dissolution are contested in the Indian legal system. There is no regulation or statute legislated upon bankruptcy which denotes a condition of inability to meet a demand of a creditor as is common in many other jurisdictions.

Winding up of companies was in the jurisdiction of the courts which can take a decade even after the company has actually been declared insolvent. On the other hand, supervisory restructuring at the behest of the Board of Industrial and Financial Reconstruction is generally undertaken using receivership by a public entity.

Dutch bankruptcy law is governed by the Dutch Bankruptcy Code (Faillissementswet). The code covers three separate legal proceedings.

Federal Law No. 127-FZ “On Insolvency (Bankruptcy)” dated 26 October 2002 (as amended) (the “Bankruptcy Act”), replacing the previous law in 1998, to better address the above problems and a broader failure of the action. Russian insolvency law is intended for a wide range of borrowers: individuals and companies of all sizes, with the exception of state-owned enterprises, government agencies, political parties and religious organizations. There are also special rules for insurance companies, professional participants of the securities market, agricultural organizations and other special laws for financial institutions and companies in the natural monopolies in the energy industry. Federal Law No. 40-FZ “On Insolvency (Bankruptcy)” dated 25 February 1999 (as amended) (the “Insolvency Law of Credit Institutions”) contains special provisions in relation to the opening of insolvency proceedings in relation to the credit company. Insolvency Provisions Act, credit organizations used in conjunction with the provisions of the Bankruptcy Act.

Bankruptcy law provides for the following stages of insolvency proceedings: Monitoring procedure (nablyudeniye); The economic recovery (finansovoe ozdorovleniye); External control (vneshneye upravleniye); Liquidation (konkursnoye proizvodstvo) and Amicable Agreement (mirovoye soglasheniye).

The main face of the bankruptcy process is the insolvency officer (trustee in bankruptcy, bankruptcy manager). At various stages of bankruptcy, he has to be determined: the temporary officer in Monitoring procedure, external manager in External control, the receiver or administrative officer in The economic recovery, the liquidator. During the bankruptcy trustee in bankruptcy (insolvency officer) has a decisive influence on the movement of assets (property) of the debtor – the debtor and has a key influence on the economic and legal aspects of its operations.

Under Swiss law, bankruptcy can be a consequence of insolvency. It is a court-ordered form of debt enforcement proceedings that applies, in general, to registered commercial entities only. In a bankruptcy, all assets of the debtor are liquidated under the administration of the creditors, although the law provides for debt restructuring options similar to those under Chapter 11 of the U.S. Bankruptcy code.

In Sweden, bankruptcy (Swedish: konkurs) is a formal process that may involve a company or individual. It is not the same as insolvency, which is inability to pay debts that should have been paid. A creditor or the company itself can apply for bankruptcy. An external bankruptcy manager will take over the company or the assets of the person, trying to sell as much as possible. A person or a company in bankruptcy can not access its assets (with some exceptions).

The formal bankruptcy process is rarely carried out for individuals.[27] Creditors can claim money through the Enforcement Administration anyway, and creditors do not usually benefit from the bankruptcy of individuals because there are costs of a bankruptcy manager which has priority. Unpaid debts remain after bankruptcy for individuals. People who are deeply in debt can obtain a debt arrangement procedure (Swedish: skuldsanering). On application, they obtain a payment plan under which they pay as much as they can for five years, and then all remaining debts are cancelled. Debts that are derived from being subjected to a ban on business operations (issued by court, commonly for tax fraud and/or fraudulent business practices) or owed to a crime victim as compensation for damages, are exempted from this and like before this process was introduced in 2006 will remain lifelong.[28] Debts that have not been claimed during a 3-10 year period will be cancelled. Often crime victims stop their claims after a few years since criminals often do not have job incomes and might be hard to locate, while banks make sure their claims are not cancelled. The most common reasons for personal insolvency in Sweden are illness, unemployment, divorce or company bankruptcy.

For companies, formal bankruptcy is a normal effect of insolvency, even if there is a reconstruction mechanism where the company can be given time to solve its situation, e.g. by finding an investor. The formal bankruptcy involves contracting a bankruptcy manager, who makes certain that assets are sold and money divided by the priority the law claims, and no other way. Banks have such a priority. After a finished bankruptcy for a company, it is terminated. The activities might continue in a new company which has bought important assets from the bankrupted company.

Bankruptcy in the United Kingdom (in a strict legal sense) relates only to individuals (including sole proprietors) and partnerships. Companies and other corporations enter into differently named legal insolvency procedures: liquidation and administration (administration order and administrative receivership). However, the term ‘bankruptcy’ is often used when referring to companies in the media and in general conversation. Bankruptcy in Scotland is referred to as sequestration. To apply for bankruptcy in Scotland, an individual must have more than 1500 of debt.

A trustee in bankruptcy must be either an Official Receiver (a civil servant) or a licensed insolvency practitioner. Current law in England and Wales derives in large part from the Insolvency Act 1986. Following the introduction of the Enterprise Act 2002, a UK bankruptcy will now normally last no longer than 12 months and may be less, if the Official Receiver files in court a certificate that his investigations are complete. It was expected that the UK Government’s liberalisation of the UK bankruptcy regime would increase the number of bankruptcy cases; initially cases increased, as the Insolvency Service statistics appear to bear out. Since 2009, the introduction of the Debt Relief Order has resulted in a dramatic fall in bankruptcies, the latest estimates for year 2014/15 being significantly less than 30,000 cases.

The UK bankruptcy law was changed in May 2000, effective May 29, 2000.[29] Debtors may now retain occupational pensions while in bankruptcy, except in rare cases.[29]

The Government have updated legislation (2016) to streamline the application process for UK bankruptcy. UK residents now need to apply online for bankruptcy – there is an upront fee of 655. The process for residents of Northern Ireland differs – applicants must follow the older process of applying through the courts.[30]

Bankruptcy in the United States is a matter placed under federal jurisdiction by the United States Constitution (in Article 1, Section 8, Clause 4), which empowers Congress to enact “uniform Laws on the subject of Bankruptcies throughout the United States”. The Congress has enacted statutes governing bankruptcy, primarily in the form of the Bankruptcy Code, located at Title 11 of the United States Code. Federal law is amplified by state law in some places where Federal law fails to speak or expressly defers to state law.

While bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the U.S. District Courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, are often dependent upon State law. One example: two states, Maryland and Virginia, which are adjoining states, have different personal exemption amounts that cannot be seized for payment of debts. This amount is the first $6,000 in property or cash in Maryland, but only the first $5,000 in Virginia. State law therefore plays a major role in many bankruptcy cases, and it is often not possible to generalize bankruptcy law across state lines.

Generally, a debtor declares bankruptcy to obtain relief from debt, and this is accomplished either through a discharge of the debt or through a restructuring of the debt. Generally, when a debtor files a voluntary petition, his or her bankruptcy case commences.

There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:

The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. Whether a person qualifies for Chapter 7 or Chapter 13 is in part determined by income.[31][32] As much as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases. Corporations and other business forms file under Chapters 7 or 11. Often called “straight bankruptcy” or “simple bankruptcy,” it allows consumers to eliminate just about all of their debts over a period of three or four months. Typically, the only debts that survive a Chapter 7 are student loans, child support obligations, some tax bills and criminal fines. Credit cards, pay day loans, personal loans, medical bills, and just about all other bills are discharged.

Ninety-one percent of U.S. individuals who enter bankruptcy hire an attorney to file their Chapter 7 petitions.[33] The typical cost of an attorney is $1,170.00.[33] Alternatives to filing with an attorney are: filing pro se,[34] hiring a non-lawyer petition preparer,[35] or using online software to generate the petition.

In Chapter 7, a debtor surrenders his or her non-exempt property to a bankruptcy trustee who then liquidates the property and distributes the proceeds to the debtor’s unsecured creditors. In exchange, the debtor is entitled to a discharge of some debt; however, the debtor will not be granted a discharge if he or she is guilty of certain types of inappropriate behavior (e.g., concealing records relating to financial condition) and certain debts (e.g., spousal and child support and most student loans). Some taxes will not be discharged even though the debtor is generally discharged from his or her debt. Many individuals in financial distress own only exempt property (e.g., clothes, household goods, an older car, or the tools of their trade or profession) and will not have to surrender any property to the trustee.[31] The amount of property that a debtor may exempt varies from state to state (as noted above, Virginia and Maryland have a $1,000 difference.) Chapter 7 relief is available only once in any eight-year period. Generally, the rights of secured creditors to their collateral continues even though their debt is discharged. For example, absent some arrangement by a debtor to surrender a car or “reaffirm” a debt, the creditor with a security interest in the debtor’s car may repossess the car even if the debt to the creditor is discharged.

The 2005 amendments to the Bankruptcy Code introduced the “means test” for eligibility for chapter 7. An individual who fails the means test will have his or her chapter 7 case dismissed or may have to convert his or her case to a case under chapter 13.

Generally, a trustee will sell most of the debtor’s assets to pay off creditors. However, certain assets of the debtor are protected to some extent. For example, Social Security payments, unemployment compensation, and limited values of equity in a home, car, or truck, household goods and appliances, trade tools, and books are protected. However, these exemptions vary from state to state.

In Chapter 13, the debtor retains ownership and possession of all of his or her assets, but must devote some portion of his or her future income to repaying creditors, generally over a period of three to five years. The amount of payment and the period of the repayment plan depend upon a variety of factors, including the value of the debtor’s property and the amount of a debtor’s income and expenses. Secured creditors may be entitled to greater payment than unsecured creditors.[36]

Relief under Chapter 13 is available only to individuals with regular income whose debts do not exceed prescribed limits. If the debtor is an individual or a sole proprietor, the debtor is allowed to file for a Chapter 13 bankruptcy to repay all or part of the debts. Under this chapter, the debtor can propose a repayment plan in which to pay creditors over three to five years. If the monthly income is less than the state’s median income, the plan will be for three years unless the court finds “just cause” to extend the plan for a longer period. If the debtor’s monthly income is greater than the median income for individuals in the debtor’s state, the plan must generally be for five years. A plan cannot exceed the five-year limitation.

In contrast to Chapter 7, the debtor in Chapter 13 may keep all of his or her property, whether or not exempt. If the plan appears feasible and if the debtor complies with all the other requirements, the bankruptcy court will typically confirm the plan and the debtor and creditors will be bound by its terms. Creditors have no say in the formulation of the plan other than to object to the plan, if appropriate, on the grounds that it does not comply with one of the Code’s statutory requirements. Generally, the payments are made to a trustee who in turn disburses the funds in accordance with the terms of the confirmed plan.

When the debtor completes payments pursuant to the terms of the plan, the court will formally grant the debtor a discharge of the debts provided for in the plan. However, if the debtor fails to make the agreed upon payments or fails to seek or gain court approval of a modified plan, a bankruptcy court will often dismiss the case on the motion of the trustee. Pursuant to the dismissal, creditors will typically resume pursuit of state law remedies to the extent a debt remains unpaid.

In Chapter 11, the debtor retains ownership and control of assets and is re-termed a debtor in possession (DIP). The debtor in possession runs the day-to-day operations of the business while creditors and the debtor work with the Bankruptcy Court in order to negotiate and complete a plan. Upon meeting certain requirements (e.g., fairness among creditors, priority of certain creditors) creditors are permitted to vote on the proposed plan. If a plan is confirmed the debtor will continue to operate and pay its debts under the terms of the confirmed plan. If a specified majority of creditors do not vote to confirm a plan, additional requirements may be imposed by the court in order to confirm the plan. Debtors filing for Chapter 11 protection a second time are known informally as “Chapter 22” filers.[37]

Chapter 7 and Chapter 13 are the efficient bankruptcy chapters often used by most individuals. The chapters which almost always apply to consumer debtors are chapter 7, known as a “straight bankruptcy”, and chapter 13, which involves an affordable plan of repayment. An important feature applicable to all types of bankruptcy filings is the automatic stay. The automatic stay means that the mere request for bankruptcy protection automatically halts most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection activity.

A Bankruptcy Exemption defines the property a debtor may retain and preserve through bankruptcy. Certain real and personal property can be exempted on “Schedule C”[38] of a debtor’s bankruptcy forms, and effectively be taken outside the debtor’s bankruptcy estate. Bankruptcy exemptions are available only to individuals filing bankruptcy.[39] There are two alternative systems that can be used to “exempt” property from a bankruptcy estate, federal exemptions[40] (available in some states but not all), and state exemptions (which vary widely between states).

After a bankruptcy petition is filed the court will schedule a hearing, called a 341 meeting or meeting of creditors, at which the bankruptcy trustee and creditors may review the petitioner’s petition and its supporting schedules, question the petitioner, and challenge exemptions that they believe are not proper.[41]

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, Pub. L. No. 109-8, 119 Stat. 23 (April 20, 2005) (“BAPCPA”), substantially amended the Bankruptcy Code. Many provisions of BAPCPA were forcefully advocated by consumer lenders and were just as forcefully opposed by many consumer advocates, bankruptcy academics, bankruptcy judges, and bankruptcy lawyers.[42] The enactment of BAPCPA followed nearly eight years of debate in Congress. According to the book, The Unwinding, Joe Biden, Chris Dodd, and Hillary Clinton helped pass this bill.[43] Most of the law’s provisions became effective on October 17, 2005. Upon signing the bill, President Bush stated:

Under the new law, Americans who have the ability to pay will be required to pay back at least a portion of their debts. Those who fall behind their state’s median income will not be required to pay back their debts. The new law will also make it more difficult for serial filers to abuse the most generous bankruptcy protections. Debtors seeking to erase all debts will now have to wait eight years from their last bankruptcy before they can file again. The law will also allow us to clamp down on bankruptcy mills that make their money by advising abusers on how to game the system.

Advocates of BAPCPA claimed that its passage would reduce losses to creditors such as credit card companies, and that those creditors would then pass on the savings to other borrowers in the form of lower interest rates. Critics have argued that these claims turned out to be false. After BAPCPA passed, although credit card company losses decreased, prices charged to customers increased, and credit card company profits soared.[45]

Among its many changes to consumer bankruptcy law, BAPCPA includes a “means test”,[46] which was intended to make it more difficult for a significant number of financially distressed individual debtors whose debts are primarily consumer debts to qualify for relief under Chapter 7 of the Bankruptcy Code. The “means test” is employed in cases where an individual with primarily consumer debts has more than the average annual income for a household of equivalent size, computed over a 180-day period prior to filing. If the individual must “take” the “means test”, their average monthly income over this 180-day period is reduced by a series of allowances for living expenses and secured debt payments in a very complex calculation that may or may not accurately reflect that individual’s actual monthly budget. If the results of the means test show no disposable income (or in some cases a very small amount) then the individual qualifies for Chapter 7 relief. If a debtor does not qualify for relief under Chapter 7 of the Bankruptcy Code, either because of the Means Test or because Chapter 7 does not provide a permanent solution to delinquent payments for secured debts, such as mortgages or vehicle loans, the debtor may still seek relief under Chapter 13 of the Code. A Chapter 13 plan often does not require repayment to general unsecured debts, such as credit cards or medical bills.

BAPCPA also requires individuals seeking bankruptcy relief to undertake credit counselling with approved counseling agencies prior to filing a bankruptcy petition and to undertake education in personal financial management from approved agencies prior to being granted a discharge of debts under either Chapter 7 or Chapter 13. Some studies of the operation of the credit counseling requirement suggest that it provides little benefit to debtors who receive the counseling because the only realistic option for many is to seek relief under the Bankruptcy Code.[47]

During 2004, the number of insolvencies reached all time highs in many European countries. In France, company insolvencies rose by more than 4%, in Austria by more than 10%, and in Greece by more than 20%. The increase in the number of insolvencies, however, does not indicate the total financial impact of insolvencies in each country because there is no indication of the size of each case. An increase in the number of bankruptcy cases does not necessarily entail an increase in bad debt write-off rates for the economy as a whole.

Bankruptcy statistics are also a trailing indicator. There is a time delay between financial difficulties and bankruptcy. In most cases, several months or even years pass between the financial problems and the start of bankruptcy proceedings. Legal, tax, and cultural issues may further distort bankruptcy figures, especially when comparing on an international basis. Two examples:

The insolvency numbers for private individuals also do not show the whole picture. Only a fraction of heavily indebted households will decide to file for insolvency. Two of the main reasons for this are the stigma of declaring themselves insolvent and the potential business disadvantage.

Following the soar in insolvencies in the last decade, a number of European countries, such as France, Germany, Spain and Italy, began to revamp their bankruptcy laws in 2013. They modelled these new laws after the image of Chapter 11 of the U.S. Bankruptcy Code. Currently, the majority of insolvency cases have ended in liquidation in Europe rather than the businesses surviving the crisis. These new law models are meant to change this; lawmakers are hoping to turn bankruptcy into a chance for restructuring rather than a death sentence for the companies.[48]

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Bankruptcy – Wikipedia

Caesars unit clears Nevada hurdle in bankruptcy emergence – Las Vegas Review-Journal

For Caesars Entertainment Corp.s lengthy and, so far, triumphant climb out of Chapter 11 bankruptcy protection, it was Veni, vidi, vici I came, I saw, I conquered.

For Caesars Entertainment Corp.s lengthy and, so far, triumphant climb out of Chapter 11 bankruptcy protection, it was Veni, vidi, vici I came, I saw, I conquered.

Nevada Gaming Commission Chairman Tony Alamo, like his state Gaming Control Board counterpart, A.G. Burnett, two weeks earlier, quoted the Latin phrase attributed to Julius Caesar on the Battle of Zela after commissioners unanimously approved a series of registrations and licensing that will enable the Las Vegas-based gaming giant to clear Nevadas final regulatory hurdle while in bankruptcy.

Caesars has 47 properties worldwide, including nine in Las Vegas.

Caesars CEO Mark Frissora, Tim Donovan, the companys general counsel and compliance officer, and chief financial officer Eric Hession explained a merger of Caesars Entertainment Corp. with Caesars Entertainment Operating Co. and the emerging companys exit from Chapter 11 bankruptcy protection as well as registrations of subsidiary companies and LLCs and the licensing and suitability of several corporate officers, executives and key employees.

Most members of the commission sat in on or read transcripts from Caesars presentation to the state Gaming Control Board in Carson City on Aug. 9 at which board members unanimously recommended approval of every regulatory matter.

Commissioners, who didnt have to approve the bankruptcy plan but instead licensed and registered the new post-bankruptcy entities, had no objections in their hearing, but questioned executives to fully understand the corporate restructuring.

Under terms of the bankruptcy emergence plan, outlined in an 839-page registration statement filed with the Securities and Exchange Commission last month, Caesars would separate nearly all of its U.S.-based real estate property assets from its gaming operations. Caesars Entertainment would continue to own and manage the gaming operations and the property assets would be held by a newly created real estate investment trust owned by some creditors.

Caesars filed for Chapter 11 bankruptcy protection in January 2015 and after two years of contentious negotiations among creditors, Judge Benjamin Goldgar of the Northern District of Illinois in Chicago approved the bankruptcy plan in January 2017.

Company shareholders overwhelmingly approved a merger in two separate votes late last month.

Caesars is now down to two jurisdictions needing to approve the companys emergence from bankruptcy. Company officials will meet with regulators in Louisiana and Missouri in September and plan to escape bankruptcy in early October.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

Big plans for Caesars

Caesars CEO Mark Frissora told the Nevada Gaming Commission that Caesars Entertainment has big growth plans once it emerges from Chapter 11 bankruptcy protection in October.

The company already has invested $640 million on improvements on the Strip, including 6,000 room renovations this year and 4,000 in 2016.

Frissora said the company is looking to license the Caesars and Flamingo brands domestically and internationally and would consider property acquisitions.

Caesars also is looking to develop 90 acres in various locations in Las Vegas over the next two to three years, including a 300,000-square-foot convention facility east of The Linq Promenade serving nearby Harrahs, Flamingo and The Linq Hotel and could lead to the addition of 300 to 400 new jobs when completed.

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Caesars unit clears Nevada hurdle in bankruptcy emergence – Las Vegas Review-Journal

Closed-door talks as Naval Hospital bankruptcy and Charleston County lawsuit continue – Charleston Post Courier

The legal teams for Charleston County and the Utah-based owners of the former Charleston Naval Hospital in North Charleston were summoned to an afternoon of closed-door talks Thursday in downtown Charleston by U.S. Bankruptcy Court Judge John E. Waites.

A trial, in which the building’s owners are suing the county for tens of millions of dollars, had been scheduled to start Wednesday morning but was postponed and has not been rescheduled. The two sides have positions that would seem to defy compromise the building owners want the county to honor a nearly $30 million long-term lease agreement that the county backed out of last year and it’s not known if any progress in the dispute was made Thursday.

Charleston County’s lead lawyer, Joe Dawson, said only “uneventful” in response to a reporter’s questions about the talks, as he left the court building. The owners of the former Naval Hospital in North Charleston, Chicora Life Center, and their legal team made no substantive comments while waiting for the elevator.

The county had planned to become the anchor tenant of a redeveloped Naval Hospital, leasing three floors of the tallest building in North Charleston, at Rivers and McMillan avenues, and relocating some public services there starting in 2014.

It was a plan meant to help revitalize a struggling area of North Charleston, and facilitate the county’s agreed-upon sale of a downtown Charleston building known as Charleston Center to the Medical University of South Carolina.

The lease agreement allowed the Chicora group investors including Donald Trump Jr., a son of the U.S. president to secure financing to redevelop the long-vacant hospital building. However, the county backed out of the deal in 2016 after complaints about repeated delays, missed deadlines and related issues such as multiple contractors claiming they weren’t paid.

With the anchor tenant gone, Boston lender UC Funds foreclosed on the hospital property, claiming more than $15 million in debt, and the building owners sought bankruptcy protection and sued the county. Waites ruled previously that the lease would be considered an asset in the bankruptcy case.

Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.

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Closed-door talks as Naval Hospital bankruptcy and Charleston County lawsuit continue – Charleston Post Courier

Seadrill, a Big Offshore Oil Player, to Seek Bankruptcy Protection – Wall Street Journal (subscription)


Wall Street Journal (subscription)
Seadrill, a Big Offshore Oil Player, to Seek Bankruptcy Protection
Wall Street Journal (subscription)
Offshore-drilling services major Seadrill Ltd. said Thursday it will likely file for bankruptcy protection next month as part of a plan to restructure around $10 billion in debt. The Bermuda-based company, controlled by Norwegian shipping magnate John …
Offshore driller Seadrill to file for chapter 11MarketWatch
Seadrill (SDRL) Stock: Falling Hard On Bankruptcy NewsCNA Finance (press release)
Seadrill in line for Chapter 11 bankruptcy within weeksEnergy Voice

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Seadrill, a Big Offshore Oil Player, to Seek Bankruptcy Protection – Wall Street Journal (subscription)

Hanjin Bankruptcy Led to Heavy Losses, Write-Offs – Transport Topics Online

Hanjin Shipping Co.s financial troubles that led to bankruptcy a year ago stranded precious cargo, causing losses for trucking and other transportation companies.

LESSONS LEARNED: Supply chain execs say Hanjin taught them a lot.

RoadOne IntermodaLogistics lost more than $100,000, CEO Ken Kellaway said.

I dont think well get more than 5 or 10 cents on the dollar and even thats a stretch, he said. RoadOne ranks No. 9 on the Transport Topics list of top intermodal and drayage providers.

Devine Intermodal hasnt received a dime of a $100,000 loss after the Hanjin collapse. (Devine Intermodal)

Most other trucking companies and creditors havent seen any direct payments from Hanjin, though according to Indianapolis-based attorney Craig Helmrich of Scopelitis, Garvin, Light, Hanson & Feary, some have been able to settle claims for partial credit.

Some people settled both sides of the claim, meaning the competing claim of Hanjin wanting to collect its receivables and Hanjin creditors wanting some credit for the injury the business [collapse] caused, Helmrich told TT.

According to the Declaration and Status Report of the first creditors meeting June 1 in a Korean court, more than 180 creditors attended the session, led by Jin Han Kim, trustee for Hanjin.

Gerstner

Attorney Kurt Gerstner of Seoul, South Korea-based Lee International IP & Law Group, told TT that his 20 or 30 Hanjin clients have basically dropped out now because they have low expectations about recovery, given the information thats come from the court.

According to the report, claims filed total about $10 billion. The debtors estate has recovered just a fraction, raising about 2.4%.

Helmrich explained that even if the Hanjin bankruptcy court denies a claim, thats not necessarily the end of the road. Theres a whole process in Korea where everybody submits their claim and then a trustee decides whether to agree or dispute it. If they dispute, then you have a miniature trial where you present evidence and the court looks at everything and decides whether youve proved [grounds for payment].

He said Scopelitis told its dozen Hanjin clients early that they could easily spend $50,000 proving their case, and if they only recovered a cent on the dollar, it wouldnt pay to wait out the bankruptcy.

None of my clients held out hope for a payout of any significant size in the case on unsecured claims. Because there was little hope of a payout, unsecured creditors were wise to use their claims to negotiate reductions in claims by Hanjin, he said.

One creditor who didnt settle, Devine Intermodal, instead chose to take its lumps and hasnt received a dime. We took the hit and canceled the receivables. It was a loss of $100,000 on our bottom [line] for 2016, said Richard Coyle, president of the Sacramento-based intermodal company. Once [Hanjin] declared bankruptcy, all of our open receivables were deemed uncollectable, so we have already written them off. We tried to seek remuneration from actual cargo owners but got nowhere.

Instead of continuing to fight, Devine chose to raise our prices with those same cargo owners with future shipments on other ocean carriers.

See more here:

Hanjin Bankruptcy Led to Heavy Losses, Write-Offs – Transport Topics Online

CEOC Bankruptcy Agreement Filed – Bankrupt Company News (press release) (blog)

Caesars Entertainment Operating Company filed with the U.S. Bankruptcy Court a motion to approve a compromise and settlement agreement by and among Caesars Entertainment Operating Company (CEOC), Caesars Entertainment Corporation (CEC) and designate insurers under certain management liability insurance policies (collectively, Settling Insurers) concerning the resolution and release of certain claims covered under certain policies.

The motion explains, The Settlement Agreement between Caesars and the Settling Insurers resolves a multiparty dispute concerning $140 million in coverage under Caesars director and officer insurance policy arrangement. Pursuant to the Settlement Agreement, the Settling Insurers have agreed to pay, in cash, 90 percent of the contracted-for coverage amounts under the respective policies. In exchange, Caesars has agreed to relieve the Settling Insurers from any further obligations to Caesars under the insurance policies. This $126 million cash settlement is a vital part of the Debtors confirmed plan of reorganization [Docket No. 6318] and underlies both the cash distributions to creditors and, because cash is fungible, the cash at Caesars that underlies the value of the equity being distributed to the Debtors creditors under the Plan. Thus, entry into and approval of the Settlement Agreement is a key milestone as the Debtors work towards emergence from bankruptcy protection. Accordingly, for these reasons and the reasons set forth herein, the Debtors submit that the Settlement Agreement is fair and reasonable to their estates and should be approved.

The Court scheduled a September 13, 2017 hearing to consider the settlement, with objections due by September 6, 2017.

Read more CEOC bankruptcy news.

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CEOC Bankruptcy Agreement Filed – Bankrupt Company News (press release) (blog)

Bankruptcy | United States Courts

About Bankruptcy

Filing bankruptcy can help a person by discarding debt or making a plan to repay debts. A bankruptcy case normally begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity.

All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code.

There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code.

Bankruptcy Basics provides detailed information about filing.

Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. Individuals can file bankruptcy without a lawyer, which is called filing pro se. Learn more.

Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company (LLC). Sole proprietors must use the forms that are numbered in the 100 series.

If you need help finding a bankruptcy lawyer, the resources below may help. If you are unable to afford an attorney, you may qualify for free legal services.

Link:

Bankruptcy | United States Courts

Bankruptcy – Wikipedia

Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owes to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Bankruptcy is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries, such as the United Kingdom, bankruptcy is limited to individuals, and other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. In the United States, bankruptcy is applied more broadly to formal insolvency proceedings. In France, the cognate French word banqueroute is used solely for cases of fraudulent bankruptcy, whereas the term faillite (cognate of “failure”) is used for bankruptcy in accordance with the law.[1]

The word bankruptcy is derived from Italian banca rotta, meaning “broken bank”, which may stem from a widespread custom in the Republic of Genoa of breaking a moneychanger’s bench or counter to signify his insolvency, or which may be only a figure of speech.[2][3][4][5][6]

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 physical labour. Many city-states in ancient Greece limited debt slavery to a period of five years; debt slaves had protection of life and limb, which regular slaves did not enjoy. However, servants of the debtor could be retained beyond that deadline by the creditor and were often forced to serve their new lord for a lifetime, usually under significantly harsher conditions. An exception to this rule was Athens, which by the laws of Solon forbade enslavement for debt; as a consequence, most Athenian slaves were foreigners (Greek or otherwise).

The Statute of Bankrupts of 1542 was the first statute under English law dealing with bankruptcy or insolvency.[7] Bankruptcy is also documented in East Asia. According to al-Maqrizi, the Yassa of Genghis Khan contained a provision that mandated the death penalty for anyone who became bankrupt three times.

A failure of a nation to meet bond repayments has been seen on many occasions. Philip II of Spain had to declare four state bankruptcies in 1557, 1560, 1575 and 1596. According to Kenneth S. Rogoff, “Although the development of international capital markets was quite limited prior to 1800, we nevertheless catalog the various defaults of France, Portugal, Prussia, Spain, and the early Italian city-states. At the edge of Europe, Egypt, Russia, and Turkey have histories of chronic default as well.”[8]

The principal focus of modern insolvency legislation and business debt restructuring practices no longer rests on the elimination of insolvent entities, but on the remodeling of the financial and organizational structure of debtors experiencing financial distress so as to permit the rehabilitation and continuation of the business.

For private households, it is argued to be insufficient to merely dismiss debts after a certain period[citation needed]. It is important to assess the underlying problems and to minimize the risk of financial distress to re-occur. It has been stressed that debt advice, a supervised rehabilitation period, financial education and social help to find sources of income and to improve the management of household expenditures need to be equally provided during this period of rehabilitation (Refiner et al., 2003; Gerhardt, 2009; Frade, 2010). In most EU Member States, debt discharge is conditioned by a partial payment obligation and by a number of requirements concerning the debtor’s behavior. In the United States (US), discharge is conditioned to a lesser extent. The spectrum is broad in the EU, with the UK coming closest to the US system (Reifner et al., 2003; Gerhardt, 2009; Frade, 2010). The Other Member States do not provide the option of a debt discharge. Spain, for example, passed a bankruptcy law (ley concurs) in 2003 which provides for debt settlement plans that can result in a reduction of the debt (maximally half of the amount) or an extension of the payment period of maximally five years (Gerhardt, 2009), but it does not foresee debt discharge.[9]

In the US, it is almost impossible to discharge student loan debt by filing bankruptcy.[10] Unlike most other debtors, the individual with student debt must give a series of reasons and tests (with steps) to prove that the debtor could not pay the debt. If the person were to file bankruptcy, he or she is normally encouraged to do so under Chapter 13.

In order to avoid bankruptcy, one could negotiate with the lender to lower monthly payments, or one could seek student debt consolidation. Student loan bankruptcy is considered a last resort. However, some borrowers find themselves being forced to file bankruptcy, as the lender refused to lower payments, or to lower/freeze interest rates (which grows the debt).

Bankruptcy fraud is a white-collar crime. While difficult to generalize across jurisdictions, common criminal acts under bankruptcy statutes typically involve concealment of assets, concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or declarations, and fee fixing or redistribution arrangements. Falsifications on bankruptcy forms often constitute perjury. Multiple filings are not in and of themselves criminal, but they may violate provisions of bankruptcy law. In the U.S., bankruptcy fraud statutes are particularly focused on the mental state of particular actions.[11][12] Bankruptcy fraud is a federal crime in the United States.[13]

Bankruptcy fraud should be distinguished from strategic bankruptcy, which is not a criminal act since it creates a real (not a fake) bankruptcy state. However, it may still work against the filer.

All assets must be disclosed in bankruptcy schedules whether or not the debtor believes the asset has a net value. This is because once a bankruptcy petition is filed, it is for the creditors, not the debtor, to decide whether a particular asset has value. The future ramifications of omitting assets from schedules can be quite serious for the offending debtor. In the United States, a closed bankruptcy may be reopened by motion of a creditor or the U.S. trustee if a debtor attempts to later assert ownership of such an “unscheduled asset” after being discharged of all debt in the bankruptcy. The trustee may then seize the asset and liquidate it for the benefit of the (formerly discharged) creditors. Whether or not a concealment of such an asset should also be considered for prosecution as fraud and/or perjury would then be at the discretion of the judge and/or U.S. Trustee.

In Argentina the national Act “24.522 de Concursos y Quiebras” regulates the Bankruptcy and the Reorganization of the individuals and companies, public entities are not included.

In Australia, bankruptcy is a status which applies to individuals and is governed by the federal Bankruptcy Act 1966.[14] Companies do not go bankrupt but rather go into liquidation or administration, which is governed by the federal Corporations Act 2001.[15]

If a person commits an act of bankruptcy, then a creditor can apply to the Federal Circuit Court or the Federal Court for a sequestration order.[16] Acts of bankruptcy are defined in the legislation, and include the failure to comply with a bankruptcy notice.[17] A bankruptcy notice can be issued where, among other cases, a person fails to pay a judgment debt.[18] A person can also seek to have himself or herself declared bankrupt by lodging a debtor’s petition with the “Official Receiver”,[19] which is the Australian Financial Security Authority (AFSA).[20]

To declare bankruptcy or for a creditors petition to be lodged, the debt owed must be at least $5,000.[18]

All bankrupts are required to lodge a Statement of Affairs document with AFSA, which includes important information about their assets and liabilities. A bankruptcy cannot be annulled until this document has been lodged.

Ordinarily, a bankruptcy lasts three years from the filing of the Statement of Affairs with AFSA.[21]

A Bankruptcy Trustee (in most cases, the Official Receiver) is appointed to deal with all matters regarding the administration of the bankrupt estate. The Trustee’s job includes notifying creditors of the estate and dealing with creditor inquiries; ensuring that the bankrupt complies with his or her obligations under the Bankruptcy Act; investigating the bankrupt’s financial affairs; realising funds to which the estate is entitled under the Bankruptcy Act and distributing dividends to creditors if sufficient funds become available.

For the duration of their bankruptcy, all bankrupts have certain restrictions placed upon them. For example, a bankrupt must obtain the permission of his or her trustee to travel overseas. Failure to do so may result in the bankrupt being stopped at the airport by the Australian Federal Police. Additionally, a bankrupt is required to provide his or her trustee with details of income and assets. If the bankrupt does not comply with the Trustee’s request to provide details of income, the trustee may have grounds to lodge an Objection to Discharge, which has the effect of extending the bankruptcy for a further five years.

The realisation of funds usually comes from two main sources: the bankrupt’s assets and the bankrupt’s wages. There are certain assets that are protected, referred to as “protected assets”. These include household furniture and appliances, tools of the trade and vehicles up to a certain value. All other assets of value will be sold. If a house or car is above a certain value, the bankrupt can buy the interest back from the estate in order to keep the asset. If the bankrupt does not do this, the interest vests in the estate and the trustee is able to take possession of the asset and sell it.

The bankrupt will have to pay income contributions if his or her income is above a certain threshold. If the bankrupt fails to pay, the trustee can issue a notice to garnishee the bankrupt’s wages. If that is not possible, the Trustee may seek to extend the bankruptcy for a further five years.

Bankruptcies can be annulled prior to the expiration of the normal three-year period if all debts are paid out in full. Sometimes a bankrupt may be able to raise enough funds to make an Offer of Composition to creditors, which would have the effect of paying the creditors some of the money they are owed. If the creditors accept the offer, the bankruptcy can be annulled after the funds are received.

After the bankruptcy is annulled or the bankrupt has been automatically discharged, the bankrupt’s credit report status will be shown as “discharged bankrupt” for some years. The maximum number of years this information can be held is subject to the retention limits under the Privacy Act. How long such information will be present on a credit report may be less depending on the company issuing the report, but the report must cease to record that information based on the criteria in the Privacy Act.

In Brazil, the Bankruptcy Law (11.101/05) governs court-ordered or out-of-court receivership and bankruptcy and only applies to public companies (publicly traded companies) with the exception of financial institutions, credit cooperatives, consortia, supplementary scheme entities, companies administering health care plans, equity companies and a few other legal entities. It does not apply to state-run companies.

Current law covers three legal proceedings. The first one is bankruptcy itself (“Falncia”). Bankruptcy is a court-ordered liquidation procedure for an insolvent business. The final goal of bankruptcy is to liquidate company assets and pay its creditors.

The second one is Court-ordered Restructuring (Recuperao Judicial). The goal is to overcome the business crisis situation of the debtor in order to allow the continuation of the producer, the employment of workers and the interests of creditors, leading, thus, to preserving company, its corporate function and develop economic activity. It’s a court procedure required by the debtor which has been in business for more than two years and requires approval by a judge.

The Extrajudicial Restructuring (Recuperao Extrajudicial) is a private negotiation that involves creditors and debtors and, as with court-ordered restructuring, also has to be approved by courts.[22]

Bankruptcy, also referred to as insolvency in Canada, is governed by the Bankruptcy and Insolvency Act and is applicable to businesses and individuals, for example, Target Canada, the Canadian subsidiary of the Target Corporation, the second-largest discount retailer in the United States filed for bankruptcy in January 15, 2015, and closed all of its stores by April 12. The office of the Superintendent of Bankruptcy, a federal agency, is responsible for overseeing that bankruptcies are administered in a fair and orderly manner by all licensed Trustees in Canada.

Trustees in bankruptcy, 1041 individuals licensed to administer insolvencies, bankruptcy and proposal estates and are governed by the Bankruptcy and Insolvency Act of Canada.

Bankruptcy is filed when a person or a company becomes insolvent and cannot pay their debts as they become due and if they have at least $1,000 in debt.

In 2011, the Superintendent of bankruptcy reported that trustees in Canada filed 127,774 insolvent estates. Consumer estates were the vast majority, with 122 999 estates.[23] The consumer portion of the 2011 volume is divided into 77,993 bankruptcies and 45,006 consumer proposals. This represented a reduction of 8.9% from 2010. Commercial estates filed by Canadian trustees in 2011 4,775 estates, 3,643 bankruptcies and 1,132 Division 1 proposals.[24] This represents a reduction of 8.6% over 2010.

Some of the duties of the trustee in bankruptcy are to:

Creditors become involved by attending creditors’ meetings. The trustee calls the first meeting of creditors for the following purposes:

In Canada, a person can file a consumer proposal as an alternative to bankruptcy. A consumer proposal is a negotiated settlement between a debtor and their creditors.

A typical proposal would involve a debtor making monthly payments for a maximum of five years, with the funds distributed to their creditors. Even though most proposals call for payments of less than the full amount of the debt owing, in most cases, the creditors will accept the deal, because if they do not, the next alternative may be personal bankruptcy, where the creditors will get even less money. The creditors have 45 days to accept or reject the consumer proposal. Once the proposal is accepted by both the creditors and the Court, the debtor makes the payments to the Proposal Administrator each month (or as otherwise stipulated in their proposal), and the general creditors are prevented from taking any further legal or collection action. If the proposal is rejected, the debtor is returned to his prior insolvent state and may have no alternative but to declare personal bankruptcy.

A consumer proposal can only be made by a debtor with debts to a maximum of $250,000 (not including the mortgage on their principal residence). If debts are greater than $250,000, the proposal must be filed under Division 1 of Part III of the Bankruptcy and Insolvency Act. An Administrator is required in the Consumer Proposal, and a Trustee in the Division I Proposal (these are virtually the same although the terms are not interchangeable). A Proposal Administrator is almost always a licensed trustee in bankruptcy, although the Superintendent of Bankruptcy may appoint other people to serve as administrators.

In 2006, there were 98,450 personal insolvency filings in Canada: 79,218 bankruptcies and 19,232 consumer proposals.[25]

The People’s Republic of China legalized bankruptcy in 1986, and a revised law that was more expansive and complete was enacted in 2007.

Bankruptcy in Ireland applies only to natural persons. Other insolvency processes including liquidation and examinership are used to deal with corporate insolvency.

Irish bankruptcy law has been the subject of significant comment, from both government sources and the media, as being in need of reform. Part 7 of the Civil Law (Miscellaneous Provisions) Act 2011[26] has started this process and the government has committed to further reform.

The Parliament of India in the first week of May 2016 passed Insolvency and Bankruptcy Code 2016 (New Code). Earlier a clear law on corporate bankruptcy did not exist, even though individual bankruptcy laws have been in existence since 1874. The earlier law in force was enacted in 1920 called the Provincial Insolvency Act.

The legal definitions of the terms bankruptcy, insolvency, liquidation and dissolution are contested in the Indian legal system. There is no regulation or statute legislated upon bankruptcy which denotes a condition of inability to meet a demand of a creditor as is common in many other jurisdictions.

Winding up of companies was in the jurisdiction of the courts which can take a decade even after the company has actually been declared insolvent. On the other hand, supervisory restructuring at the behest of the Board of Industrial and Financial Reconstruction is generally undertaken using receivership by a public entity.

Dutch bankruptcy law is governed by the Dutch Bankruptcy Code (Faillissementswet). The code covers three separate legal proceedings.

Federal Law No. 127-FZ “On Insolvency (Bankruptcy)” dated 26 October 2002 (as amended) (the “Bankruptcy Act”), replacing the previous law in 1998, to better address the above problems and a broader failure of the action. Russian insolvency law is intended for a wide range of borrowers: individuals and companies of all sizes, with the exception of state-owned enterprises, government agencies, political parties and religious organizations. There are also special rules for insurance companies, professional participants of the securities market, agricultural organizations and other special laws for financial institutions and companies in the natural monopolies in the energy industry. Federal Law No. 40-FZ “On Insolvency (Bankruptcy)” dated 25 February 1999 (as amended) (the “Insolvency Law of Credit Institutions”) contains special provisions in relation to the opening of insolvency proceedings in relation to the credit company. Insolvency Provisions Act, credit organizations used in conjunction with the provisions of the Bankruptcy Act.

Bankruptcy law provides for the following stages of insolvency proceedings: Monitoring procedure (nablyudeniye); The economic recovery (finansovoe ozdorovleniye); External control (vneshneye upravleniye); Liquidation (konkursnoye proizvodstvo) and Amicable Agreement (mirovoye soglasheniye).

The main face of the bankruptcy process is the insolvency officer (trustee in bankruptcy, bankruptcy manager). At various stages of bankruptcy, he has to be determined: the temporary officer in Monitoring procedure, external manager in External control, the receiver or administrative officer in The economic recovery, the liquidator. During the bankruptcy trustee in bankruptcy (insolvency officer) has a decisive influence on the movement of assets (property) of the debtor – the debtor and has a key influence on the economic and legal aspects of its operations.

Under Swiss law, bankruptcy can be a consequence of insolvency. It is a court-ordered form of debt enforcement proceedings that applies, in general, to registered commercial entities only. In a bankruptcy, all assets of the debtor are liquidated under the administration of the creditors, although the law provides for debt restructuring options similar to those under Chapter 11 of the U.S. Bankruptcy code.

In Sweden, bankruptcy (Swedish: konkurs) is a formal process that may involve a company or individual. It is not the same as insolvency, which is inability to pay debts that should have been paid. A creditor or the company itself can apply for bankruptcy. An external bankruptcy manager will take over the company or the assets of the person, trying to sell as much as possible. A person or a company in bankruptcy can not access its assets (with some exceptions).

The formal bankruptcy process is rarely carried out for individuals.[27] Creditors can claim money through the Enforcement Administration anyway, and creditors do not usually benefit from the bankruptcy of individuals because there are costs of a bankruptcy manager which has priority. Unpaid debts remain after bankruptcy for individuals. People who are deeply in debt can obtain a debt arrangement procedure (Swedish: skuldsanering). On application, they obtain a payment plan under which they pay as much as they can for five years, and then all remaining debts are cancelled. Debts that are derived from being subjected to a ban on business operations (issued by court, commonly for tax fraud and/or fraudulent business practices) or owed to a crime victim as compensation for damages, are exempted from this and like before this process was introduced in 2006 will remain lifelong.[28] Debts that have not been claimed during a 3-10 year period will be cancelled. Often crime victims stop their claims after a few years since criminals often do not have job incomes and might be hard to locate, while banks make sure their claims are not cancelled. The most common reasons for personal insolvency in Sweden are illness, unemployment, divorce or company bankruptcy.

For companies, formal bankruptcy is a normal effect of insolvency, even if there is a reconstruction mechanism where the company can be given time to solve its situation, e.g. by finding an investor. The formal bankruptcy involves contracting a bankruptcy manager, who makes certain that assets are sold and money divided by the priority the law claims, and no other way. Banks have such a priority. After a finished bankruptcy for a company, it is terminated. The activities might continue in a new company which has bought important assets from the bankrupted company.

Bankruptcy in the United Kingdom (in a strict legal sense) relates only to individuals (including sole proprietors) and partnerships. Companies and other corporations enter into differently named legal insolvency procedures: liquidation and administration (administration order and administrative receivership). However, the term ‘bankruptcy’ is often used when referring to companies in the media and in general conversation. Bankruptcy in Scotland is referred to as sequestration. To apply for bankruptcy in Scotland, an individual must have more than 1500 of debt.

A trustee in bankruptcy must be either an Official Receiver (a civil servant) or a licensed insolvency practitioner. Current law in England and Wales derives in large part from the Insolvency Act 1986. Following the introduction of the Enterprise Act 2002, a UK bankruptcy will now normally last no longer than 12 months and may be less, if the Official Receiver files in court a certificate that his investigations are complete. It was expected that the UK Government’s liberalisation of the UK bankruptcy regime would increase the number of bankruptcy cases; initially cases increased, as the Insolvency Service statistics appear to bear out. Since 2009, the introduction of the Debt Relief Order has resulted in a dramatic fall in bankruptcies, the latest estimates for year 2014/15 being significantly less than 30,000 cases.

The UK bankruptcy law was changed in May 2000, effective May 29, 2000.[29] Debtors may now retain occupational pensions while in bankruptcy, except in rare cases.[29]

The Government have updated legislation (2016) to streamline the application process for UK bankruptcy. UK residents now need to apply online for bankruptcy – there is an upront fee of 655. The process for residents of Northern Ireland differs – applicants must follow the older process of applying through the courts.[30]

Bankruptcy in the United States is a matter placed under federal jurisdiction by the United States Constitution (in Article 1, Section 8, Clause 4), which empowers Congress to enact “uniform Laws on the subject of Bankruptcies throughout the United States”. The Congress has enacted statutes governing bankruptcy, primarily in the form of the Bankruptcy Code, located at Title 11 of the United States Code. Federal law is amplified by state law in some places where Federal law fails to speak or expressly defers to state law.

While bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the U.S. District Courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, are often dependent upon State law. One example: two states, Maryland and Virginia, which are adjoining states, have different personal exemption amounts that cannot be seized for payment of debts. This amount is the first $6,000 in property or cash in Maryland, but only the first $5,000 in Virginia. State law therefore plays a major role in many bankruptcy cases, and it is often not possible to generalize bankruptcy law across state lines.

Generally, a debtor declares bankruptcy to obtain relief from debt, and this is accomplished either through a discharge of the debt or through a restructuring of the debt. Generally, when a debtor files a voluntary petition, his or her bankruptcy case commences.

There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:

The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. Whether a person qualifies for Chapter 7 or Chapter 13 is in part determined by income.[31][32] As much as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases. Corporations and other business forms file under Chapters 7 or 11. Often called “straight bankruptcy” or “simple bankruptcy,” it allows consumers to eliminate just about all of their debts over a period of three or four months. Typically, the only debts that survive a Chapter 7 are student loans, child support obligations, some tax bills and criminal fines. Credit cards, pay day loans, personal loans, medical bills, and just about all other bills are discharged.

Ninety-one percent of U.S. individuals who enter bankruptcy hire an attorney to file their Chapter 7 petitions.[33] The typical cost of an attorney is $1,170.00.[33] Alternatives to filing with an attorney are: filing pro se,[34] hiring a non-lawyer petition preparer,[35] or using online software to generate the petition.

In Chapter 7, a debtor surrenders his or her non-exempt property to a bankruptcy trustee who then liquidates the property and distributes the proceeds to the debtor’s unsecured creditors. In exchange, the debtor is entitled to a discharge of some debt; however, the debtor will not be granted a discharge if he or she is guilty of certain types of inappropriate behavior (e.g., concealing records relating to financial condition) and certain debts (e.g., spousal and child support and most student loans). Some taxes will not be discharged even though the debtor is generally discharged from his or her debt. Many individuals in financial distress own only exempt property (e.g., clothes, household goods, an older car, or the tools of their trade or profession) and will not have to surrender any property to the trustee.[31] The amount of property that a debtor may exempt varies from state to state (as noted above, Virginia and Maryland have a $1,000 difference.) Chapter 7 relief is available only once in any eight-year period. Generally, the rights of secured creditors to their collateral continues even though their debt is discharged. For example, absent some arrangement by a debtor to surrender a car or “reaffirm” a debt, the creditor with a security interest in the debtor’s car may repossess the car even if the debt to the creditor is discharged.

The 2005 amendments to the Bankruptcy Code introduced the “means test” for eligibility for chapter 7. An individual who fails the means test will have his or her chapter 7 case dismissed or may have to convert his or her case to a case under chapter 13.

Generally, a trustee will sell most of the debtor’s assets to pay off creditors. However, certain assets of the debtor are protected to some extent. For example, Social Security payments, unemployment compensation, and limited values of equity in a home, car, or truck, household goods and appliances, trade tools, and books are protected. However, these exemptions vary from state to state.

In Chapter 13, the debtor retains ownership and possession of all of his or her assets, but must devote some portion of his or her future income to repaying creditors, generally over a period of three to five years. The amount of payment and the period of the repayment plan depend upon a variety of factors, including the value of the debtor’s property and the amount of a debtor’s income and expenses. Secured creditors may be entitled to greater payment than unsecured creditors.[36]

Relief under Chapter 13 is available only to individuals with regular income whose debts do not exceed prescribed limits. If the debtor is an individual or a sole proprietor, the debtor is allowed to file for a Chapter 13 bankruptcy to repay all or part of the debts. Under this chapter, the debtor can propose a repayment plan in which to pay creditors over three to five years. If the monthly income is less than the state’s median income, the plan will be for three years unless the court finds “just cause” to extend the plan for a longer period. If the debtor’s monthly income is greater than the median income for individuals in the debtor’s state, the plan must generally be for five years. A plan cannot exceed the five-year limitation.

In contrast to Chapter 7, the debtor in Chapter 13 may keep all of his or her property, whether or not exempt. If the plan appears feasible and if the debtor complies with all the other requirements, the bankruptcy court will typically confirm the plan and the debtor and creditors will be bound by its terms. Creditors have no say in the formulation of the plan other than to object to the plan, if appropriate, on the grounds that it does not comply with one of the Code’s statutory requirements. Generally, the payments are made to a trustee who in turn disburses the funds in accordance with the terms of the confirmed plan.

When the debtor completes payments pursuant to the terms of the plan, the court will formally grant the debtor a discharge of the debts provided for in the plan. However, if the debtor fails to make the agreed upon payments or fails to seek or gain court approval of a modified plan, a bankruptcy court will often dismiss the case on the motion of the trustee. Pursuant to the dismissal, creditors will typically resume pursuit of state law remedies to the extent a debt remains unpaid.

In Chapter 11, the debtor retains ownership and control of assets and is re-termed a debtor in possession (DIP). The debtor in possession runs the day-to-day operations of the business while creditors and the debtor work with the Bankruptcy Court in order to negotiate and complete a plan. Upon meeting certain requirements (e.g., fairness among creditors, priority of certain creditors) creditors are permitted to vote on the proposed plan. If a plan is confirmed the debtor will continue to operate and pay its debts under the terms of the confirmed plan. If a specified majority of creditors do not vote to confirm a plan, additional requirements may be imposed by the court in order to confirm the plan. Debtors filing for Chapter 11 protection a second time are known informally as “Chapter 22” filers.[37]

Chapter 7 and Chapter 13 are the efficient bankruptcy chapters often used by most individuals. The chapters which almost always apply to consumer debtors are chapter 7, known as a “straight bankruptcy”, and chapter 13, which involves an affordable plan of repayment. An important feature applicable to all types of bankruptcy filings is the automatic stay. The automatic stay means that the mere request for bankruptcy protection automatically halts most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection activity.

A Bankruptcy Exemption defines the property a debtor may retain and preserve through bankruptcy. Certain real and personal property can be exempted on “Schedule C”[38] of a debtor’s bankruptcy forms, and effectively be taken outside the debtor’s bankruptcy estate. Bankruptcy exemptions are available only to individuals filing bankruptcy.[39] There are two alternative systems that can be used to “exempt” property from a bankruptcy estate, federal exemptions[40] (available in some states but not all), and state exemptions (which vary widely between states).

After a bankruptcy petition is filed the court will schedule a hearing, called a 341 meeting or meeting of creditors, at which the bankruptcy trustee and creditors may review the petitioner’s petition and its supporting schedules, question the petitioner, and challenge exemptions that they believe are not proper.[41]

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, Pub. L. No. 109-8, 119 Stat. 23 (April 20, 2005) (“BAPCPA”), substantially amended the Bankruptcy Code. Many provisions of BAPCPA were forcefully advocated by consumer lenders and were just as forcefully opposed by many consumer advocates, bankruptcy academics, bankruptcy judges, and bankruptcy lawyers.[42] The enactment of BAPCPA followed nearly eight years of debate in Congress. According to the book, The Unwinding, Joe Biden, Chris Dodd, and Hillary Clinton helped pass this bill.[43] Most of the law’s provisions became effective on October 17, 2005. Upon signing the bill, President Bush stated:

Under the new law, Americans who have the ability to pay will be required to pay back at least a portion of their debts. Those who fall behind their state’s median income will not be required to pay back their debts. The new law will also make it more difficult for serial filers to abuse the most generous bankruptcy protections. Debtors seeking to erase all debts will now have to wait eight years from their last bankruptcy before they can file again. The law will also allow us to clamp down on bankruptcy mills that make their money by advising abusers on how to game the system.

Advocates of BAPCPA claimed that its passage would reduce losses to creditors such as credit card companies, and that those creditors would then pass on the savings to other borrowers in the form of lower interest rates. Critics have argued that these claims turned out to be false. After BAPCPA passed, although credit card company losses decreased, prices charged to customers increased, and credit card company profits soared.[45]

Among its many changes to consumer bankruptcy law, BAPCPA includes a “means test”,[46] which was intended to make it more difficult for a significant number of financially distressed individual debtors whose debts are primarily consumer debts to qualify for relief under Chapter 7 of the Bankruptcy Code. The “means test” is employed in cases where an individual with primarily consumer debts has more than the average annual income for a household of equivalent size, computed over a 180-day period prior to filing. If the individual must “take” the “means test”, their average monthly income over this 180-day period is reduced by a series of allowances for living expenses and secured debt payments in a very complex calculation that may or may not accurately reflect that individual’s actual monthly budget. If the results of the means test show no disposable income (or in some cases a very small amount) then the individual qualifies for Chapter 7 relief. If a debtor does not qualify for relief under Chapter 7 of the Bankruptcy Code, either because of the Means Test or because Chapter 7 does not provide a permanent solution to delinquent payments for secured debts, such as mortgages or vehicle loans, the debtor may still seek relief under Chapter 13 of the Code. A Chapter 13 plan often does not require repayment to general unsecured debts, such as credit cards or medical bills.

BAPCPA also requires individuals seeking bankruptcy relief to undertake credit counselling with approved counseling agencies prior to filing a bankruptcy petition and to undertake education in personal financial management from approved agencies prior to being granted a discharge of debts under either Chapter 7 or Chapter 13. Some studies of the operation of the credit counseling requirement suggest that it provides little benefit to debtors who receive the counseling because the only realistic option for many is to seek relief under the Bankruptcy Code.[47]

During 2004, the number of insolvencies reached all time highs in many European countries. In France, company insolvencies rose by more than 4%, in Austria by more than 10%, and in Greece by more than 20%. The increase in the number of insolvencies, however, does not indicate the total financial impact of insolvencies in each country because there is no indication of the size of each case. An increase in the number of bankruptcy cases does not necessarily entail an increase in bad debt write-off rates for the economy as a whole.

Bankruptcy statistics are also a trailing indicator. There is a time delay between financial difficulties and bankruptcy. In most cases, several months or even years pass between the financial problems and the start of bankruptcy proceedings. Legal, tax, and cultural issues may further distort bankruptcy figures, especially when comparing on an international basis. Two examples:

The insolvency numbers for private individuals also do not show the whole picture. Only a fraction of heavily indebted households will decide to file for insolvency. Two of the main reasons for this are the stigma of declaring themselves insolvent and the potential business disadvantage.

Following the soar in insolvencies in the last decade, a number of European countries, such as France, Germany, Spain and Italy, began to revamp their bankruptcy laws in 2013. They modelled these new laws after the image of Chapter 11 of the U.S. Bankruptcy Code. Currently, the majority of insolvency cases have ended in liquidation in Europe rather than the businesses surviving the crisis. These new law models are meant to change this; lawmakers are hoping to turn bankruptcy into a chance for restructuring rather than a death sentence for the companies.[48]

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Bankruptcy – Wikipedia

Bankruptcy Basics | United States Courts

Bankruptcy Basics is a publication of the Administrative Office of the U.S. Courts. It provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process.

Bankruptcy Basics (pdf) For cases filed before October 17, 2005

Bankruptcy Basics (pdf) For cases filed on or after October 17, 2005

Bankruptcy Basics is not a substitute for the advice of competent legal counsel or a financial expert, nor is it a step-by-step guide for filing for bankruptcy. The Administrative Office of the United States Courts cannot provide legal or financial advice. Such advice may be obtained from a competent attorney, accountant, or financial adviser.

November 2011 Third Edition

While the information presented is accurate as of the date of publication, it should not be cited or relied upon as legal authority. It should not be used as a substitute for reference to the United States Bankruptcy Code (title 11, United States Code) and the Federal Rules of Bankruptcy Procedure, both of which may be reviewed at local law libraries, or to local rules of practice adopted by each bankruptcy court. Finally, this publication should not substitute for the advice of competent legal counsel.

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Bankruptcy Basics | United States Courts

Bankruptcy – All You Need to Know | Bankruptcy HQ

Personal Bankruptcy

In a nutshell, most individuals and married couples have two types of bankruptcy under the Bankruptcy Code: Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. While you can receive a bankruptcy discharge and thus eliminate your debts by filing either chapter, Chapter 7 and Chapter 13 function very differently.

Chapter 7 is intended for those looking for a fresh start. Its often referred to as liquidation bankruptcy — meaning that you must be prepared to give up any assets that you cant protect by your jurisdictions bankruptcy exemptions to get a clean slate of your debts. Below is a checklist of needed information for Chapter 7. For more detailed information on any of the checklist items, please click the highlighted links.

Chapter 13 is commonly referred to as the reorganization bankruptcy. Its filed for many reasons – most commonly to save a home from foreclosure, stop IRS collection or to consolidate debts into a single monthly affordable payment. Below is a checklist of needed information for Chapter 13. For more detailed information on any of the checklist items, please click the highlighted links.

There are many different life situations that result in people filing personal bankruptcies. Some of them are:

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Bankruptcy – All You Need to Know | Bankruptcy HQ

Bankruptcy – definition of bankruptcy by The Free Dictionary

They were sure Jones and I were ruined past help, and they blamed themselves as accessories to this bankruptcy. Suddenly there came a letter saying that the firm had gone into bankruptcy, that the business had been completely wrecked, and that the Sawyer money had been swept away with everything else. Bankruptcy must inevitably have come of this young Pagan, in Lombard-street, London, and also of a curtained alcove in the rear of the immortal boy, and also of a looking-glass let into the wall, and also of clerks not at all old, who danced in public on the slightest provocation. Now that these unions are beaten, helpless, and drifting to bankruptcy as the proportion of unemployed men in their ranks becomes greater, they are being petted and made much of by our class; an infallible sign that they are making no further progress in their duty of destroying us. I shall confine myself to a cursory review of the remaining powers comprehended under this third description, to wit: to regulate commerce among the several States and the Indian tribes; to coin money, regulate the value thereof, and of foreign coin; to provide for the punishment of counterfeiting the current coin and secureties of the United States; to fix the standard of weights and measures; to establish a uniform rule of naturalization, and uniform laws of bankruptcy, to prescribe the manner in which the public acts, records, and judicial proceedings of each State shall be proved, and the effect they shall have in other States; and to establish post offices and post roads. This bankruptcy of the graces was, I do assure you, terrible, and struck all Alencon with horror. But this did not disconcert the enthusiast, who proceeded with the story of Joseph Smith’s bankruptcy in 1837, and how his ruined creditors gave him a coat of tar and feathers; his reappearance some years afterwards, more honourable and honoured than ever, at Independence, Missouri, the chief of a flourishing colony of three thousand disciples, and his pursuit thence by outraged Gentiles, and retirement into the Far West. Morrel is utterly ruined; he has lost five ships in two years, has suffered by the bankruptcy of three large houses, and his only hope now is in that very Pharaon which poor Dantes commanded, and which is expected from the Indies with a cargo of cochineal and indigo. The voice launched into an immense tale of misfortune and bankruptcy, studded with plentiful petitions to the Government. Yes, and the faddists were to win despite the other side’s incontrovertible evidence that Fallon was headed for bankruptcy and that the proposed bonds and outstanding ones could never be met. A bankruptcy company promoter named Werner discovered the secret and blackmailed the squire into surrendering the estate. If to-morrow I should be informed of the bankruptcy of my principal debtors, the loss of my property would be a great inconvenience to me, perhaps, for many years; but it would leave me as it found me,–neither better nor worse.

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Bankruptcy – definition of bankruptcy by The Free Dictionary

Sears Canada files for bankruptcy – Jun. 22, 2017

Sears Canada, which has more than 200 stores and about 17,000 employees, was spun-off as an independent company in 2012. But the filing is still bad news for Sears Holdings (SHLD), which owns both the Sears and Kmart brands in the United States. Sears Holdings still owns 12% of its shares.

Sears Holdings CEO and principal shareholder Eddie Lampert, who has been struggling to keep the company afloat amid its own mounting losses, owns a total of 45% of Sears Canada both personally and through his hedge fund.

The bankruptcy filing was not a surprise. Sears Canada said a week ago that it was in danger of running out of the cash it needed to fund operations. Thursday’s filing said that it expects to remain in business.

Related: Retail bloodbath – Bankruptcy filings are up

Sears Canada said that recent changes to its stores are starting to resonate with consumers, but it had to file for bankruptcy to give it the time it needed to let those changes take hold. In the last quarter alone, Sears Canada burned through about 30% of its cash and maxed out its existing credit lines. It said it had planned to borrow 175 million Canadian dollars to fund operations, but after negotiations with lenders it found it could only secure only C$109 million in additional loans.

Sears Canada said it hoped to be able to restructure and emerge from bankruptcy later this year. It did not give any details about store closing plans or staff cuts it might make as part of its restructuring.

In March, Sears Holdings also issued a warning about there being “substantial doubt” it could stay in business. But that warning, as serious as it was, did not paint the dire picture of a company running out of cash in the near term as did Sears Canada’s warning last week.

Sears and Sears Canada are hardly the only struggling retailers. In the United States, retail bankruptcies are up about 30% so far this year, according to BankruptcyData.com. Well known names including RadioShack, Gymboree, Sports Authority and Payless Shoes have all filed for bankruptcy within the last year. Total store closings across the U.S. are likely to reach record levels this year.

By some estimates, 25% of U.S. malls could close within the next five years. Department stores have shed 46% of their workers since 2001, a greater percentage of their jobs than coal mines or factories have lost over the same period.

CNNMoney (New York) First published June 22, 2017: 8:41 AM ET

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Sears Canada files for bankruptcy – Jun. 22, 2017

Bankruptcy | Wex Legal Dictionary / Encyclopedia | LII …

Overview

Bankruptcy law provides for the reduction or elimination of certain debts, and can provide a timeline for the repayment of nondischargeable debts over time. It also permits individuals and organizations to repay secured debt–typically debtwith real estate orpersonal property like vehicles pledged as collateral–often onterms more favorable to the debtor.

Federal bankruptcy law is contained in Title 11 of the U.S.Code. Congress passed the Bankruptcy Code under its constitutional grant of authority to “establish… uniform laws on the subject of Bankruptcy throughout the United States.” See U.S. Constitution Article I, Section 8. States may not regulate bankruptcy, butthey may pass laws that govern other aspects of therelationship between the debtor and creditor. A number of sections of Title 11 incorporate the debtor-creditor law of the individual States.

Bankruptcy proceedings are supervised by and litigated inBankruptcy Court, which is part of the Federal District Court system. Congress established the U.S.Trustee Programto oversee theadministrationof bankruptcy proceedings, and authorized the U.S. Supreme Court to promulgatethe Federal Rules of Bankruptcy Procedure.

Chapter 7 provides for the discharge of unsecured debt, such as debt from credit cards and personal loans. Secured debt is typically unaltered, meaning that the collateral securing the debtremains in the debtor’s possession as long as timely payments aremade.Chapter 7 is always available to corporations and individuals with primarily business debt. Otherwise, individuals cannot file a Chapter 7 petition unless they meet certain income requirements.

Chapter 9 governsthe reorganization of municipalities and related local entities, such ascounty-owned hospitals and school districts. Individuals and corporations cannot file for bankruptcy under Chapter 9.

Chapter 11 is the most comprehensive chapter of the Bankruptcy Code; it provides myriadoptions to reorganize debt, e.g.by repaying some debts, discharging others and restructuring the remainder. Although individuals may file for Chapter 11 relief, the relatively high filing fees and administrative costs lead most individuals to favor Chapter 7 or Chapter 13 bankruptcy proceedings.

Chapter 12 provides for the restructuring of debtfor family farmers.Only family farmers (as defined in Sec. 101 of Title 11)are eligible and, though not analogous, it shares many characteristics with aChapter 13proceeding.

Chapter 13 permits the discharge of some debt, as well as the repayment of otherdebtover a period of three to five years.It may also permit a reduction in principal owed on secured debt, or the elimination of these debts altogether. It can also be used to structure a repayment plan for debtthat cannot be discharged in bankruptcy. Only individuals may file under this chapter, and there are some limited income and debt qualifications.

Typically, recent tax debtas well as child support, criminal restitution, and student loans will not be discharged in bankruptcyunless they are repaid in full by the debtorduring the course of the proceeding.

Individuals are permitted to keep certain assets without regard to the type of bankruptcy sought. For example, Individual Retirement Accounts (IRAs)are protected under 522(d)of Title 11 and thus cannot be involuntarily used to repay creditors in a bankruptcy.Varying levels of home equity are also often protected, asarepersonal vehicles in varying amounts.

In Czyzewski v. Jevic Holding Corp., the U.S. Supreme Court held that “when a bankruptcy court orders a Chapter 11case dismissed, it can’t also order the distribution of the debtor’s assets in a way that contradicts the order of payment in a bankruptcy liquidation.” This is an affirmation of the Chapter 11 absolute priority rule, which stipulates the order of payment in a liquidation. Compare to the 2009 Chapter 11 bankruptcy filing of General Motors, in which the absolute priority rule was not followed.

In Midland Funding, LLC v. Johnson, the Court ruled “that debt collectors can use bankruptcy proceedings to try to collect liabilities that are so old the statute of limitations has expired.” This result, however, is dependent on state law. In this case, the relevant state law provides that a creditor has the right to payment of a debt even after the statute of limitations has expired, according to the Court’s opinion.

Stern v. Marshall was a complex and high-profile case involving the estate of the defendant’s late husband, and eventually her own bankruptcy. Anna Nicole Smith, a.k.a. Vickie Marshall, filed for bankruptcy in California while the estate case was open in a Texas probate court. The bankruptcy court’s decision included a judgment on a counterclaim that Marshall made against the plaintiff, which was otherwise unrelated to the bankruptcy. Although state law allowed the bankruptcy court jurisdiction in this situation, the U.S. Supreme Courtheld that it was an unconstitutional exercise of jurisdiction. That is, bankruptcy courts have very limited jurisdiction.

TheSternprecedent was relevant years later in Executive Benefits Insurance Agency v. Arkison, in which the Court held that, underStern’sreasoning, it is unconstitutional for a bankruptcy court to enter a final judgment on a bankruptcy-related claim.It may, however,issue proposed findings of factand conclusions of law, which are to be reviewed de novo by the district court.

Last updated in June of 2017 by Stephanie Jurkowski.

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Bankruptcy | Wex Legal Dictionary / Encyclopedia | LII …

Atty Denies Bad Faith Role In Energy Co’s. Bankruptcy – Law360 (subscription)

By Nathan Hale

A founding member of Rice Pugatch Robinson Storfer & Cohen PLLC with nearly 40 years experience practicing bankruptcy law in South Florida, Pugatch took the stand in bankruptcy court in Fort Lauderdale in an ongoing series of…

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Joe’s Crab Shack closings follow parent company’s bankruptcy filing … – Pittsburgh Post-Gazette


Pittsburgh Post-Gazette
Joe's Crab Shack closings follow parent company's bankruptcy filing …
Pittsburgh Post-Gazette
The Joe's Crab Shack restaurant in Robinson has closed, making it the latest in a string of abrupt Crab Shack closings nationwide in recent weeks.
Joe's Crab Shack abruptly shuts down Pittsburgh area location …Tribune-Review

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Joe’s Crab Shack closings follow parent company’s bankruptcy filing … – Pittsburgh Post-Gazette

Battery storage manufacturer Alevo files for bankruptcy | Utility Dive – Utility Dive

Dive Brief:

Alevo USA and Alevo Manufacturing filed for Chapter 11 bankruptcy court protection late last week.

In the filing, with the United States Bankruptcy Court for the Middle District of North Carolina, Alevo said it hopes to achieve an orderly liquidation of their assets and maximize value to pay their creditors.

Alevo is the second battery maker to file for bankruptcy this year after pinning its hopes on a novel technology. The battery storage developer made a $1 billion bet on a new technology that would grant longer life to enable lithium-ion batteries. The bankruptcy comes after another energy storage

In March, Aquion Energy, which was developing an aqueous hybrid battery based on salt water, filed for bankruptcy.

Alevo signed an agreement with Ormat Technologies early this year to jointly build, own and operate the 10 MW Rabbit Hill Energy Storage Project in Georgetown, Texas, about 10 miles north of Austin. And last year, the company began a project to build an 8 MW, 4 MWh energy storage system in Lewes, Dela., that would use Alevos GridBank technology.

This decision was driven by the formidable challenges of bringing a new technology into commercial production and lacking the financial wherewithal to continue on through repeated manufacturing delays. It is a sad day for our dedicated employees and partners, as well as for the promise of Alevos technology, Peter Heintzelman, chief financial officer at Alevo, said in a statement.

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Battery storage manufacturer Alevo files for bankruptcy | Utility Dive – Utility Dive


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