Bankruptcy
Debt financing and bankruptcy
Bankruptcy: Chapter 11 versus other forms of bankruptcy
Thanks in part to concerns about childhood obesity, the low-carb diet craze, and changing consumer tastes, Interstate Bakeries Corp filed for Chapter 11 Bankruptcy in 2004. When the company did so, it was said that although the company was undergoing "reorganization and installed new management...it intended to survive. The company will continue operating its bakeries, outlet stores and distribution centers, and analysts said that its famous brands are unlikely to disappear from store shelves" (Twinkie and Wonder Bread maker files for bankruptcy, 2004, Katu). Hostess was one of Interstate's signature brands. The company showcases a wide range of products, although all fall into the same, relatively undiversified category of baked, sugary goods.
Upon reading that its products would still be offered in stores, consumers might be somewhat confused. How can a company go bankrupt, yet leave supplies of their beloved Twinkies and Wonder Bread and other signature high-sugar, highly processed products untouched? However, Chapter 11 bankruptcy does not mean that the company is defunct. It is more of a form of reorganization rather than dissolution. Chapter 11 refers to the "chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership" (Chapter 11, 2012, U.S. Courts). However, individuals as well as corporations can file for Chapter 11.
Other common types of bankruptcy include Chapter 7, which is most commonly used by individuals. "This type of bankruptcy is the most severe. Under Chapter 7, a court-appointed trustee collects the individual's assets. The trustee sells the assets for cash and pays the proceeds to the individual's creditors. Assets that are exempt under federal or state law do not have to be liquidated. Once the Chapter 7 process is final, the filing cannot be repeated for six years" (Types of bankruptcy, 2012, Bankruptcy law). In contrast, Chapter 13 is for an individual or small business "with a steady source of income" (Types of bankruptcy, 2012, Bankruptcy law)....
Similarly, establishing payment plans with vendors may help reduce monthly costs and free up extra cash. The benefit of such restructuring is that it would allow the company to avoid the highly invasive Chapter 11 process, where there is a loss of control as creditors and a court get to weigh in on company operations. The downside of debt restructuring is that Interstate would still have to pay its
The same officials that controlled the municipality prior to the filing continue to run it, and the bankruptcy court has no authority to intervene or to deviate from their authority. Note that since the bankruptcy process changes nothing in the locality's political structure. Therefore, the incentives that promoted local spending and caused the bankruptcy to begin with, remain in force. This explains why municipalities that file for Chapter 9 tend
Bankruptcy of WomenFirst Health Care, Inc. Women First HealthCare, Inc. entered the American business scene in 1996 and its declared mission was to "to help midlife women make informed choices regarding their health care and to provide pharmaceutical products" and, additionally, to provide specific pharmaceutical products to meet the needs of women over forty years. In this sense, the company developed several products, including hormone treatments, meant to improve the life
Business Financing and the Capital Structure Generally, businesses need to make several financial decisions that have significant direct effects on their operations and success in the increasingly competitive marketplace. However, there are numerous varying options that are available to businesses regardless of the types and sizes. The concept of business financing has emerged as an important aspect in the modern business environment because of the various financial decisions to be made
Iceland's Economic Crisis Web Iceland's bankruptcy The purpose of banking in Iceland: speculation and hedging The central issue: too much too soon Iceland's Transition Replicating Wall Street Taking on foreign "assets" at a ratio to GDP of 10:1 Is debt an asset? Easy credit and the role of the Housing Financing Fund Low interest rates f. Inflation g. The end of short-term financing in the wake of Lehman's collapse h. The bubble bursts The plight of the average citizen j. Aliber's speech k. Left holding the
Debt Equity Ratio Why is debt a comparatively cheaper form of finance than equity? The debt of a company is sum of money owed to the company from different sources. In contrast, equity refers to the portion of a company's assets that the shareholders own. To sell stock in a company the company must be advertised publicly, if the shareholders extend beyond those of the company's immediate administrators, which can cost money,
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