Asset Fire Sale
-Sale under pressure
-Prevent bankruptcy
-Liquidates assets even at losses
Forms of Bankruptcy in US
-Chapter 7 - Liquidation
-Chapter 11 - Reorganization
Forms of bankruptcy in Germany
-Different forms of insolvency
-Regular insolvency, insolvency in self-administration, etc.
Meaning Chapter 11
-Facilitate a sale of the company
-Company won’t sell - high debt
-Buyer acquires if high debt goes away —> Chapter 11
Chapter 11 Fortunoff
-Bidder required Chapter 11 filing
-Buyers get assets free & clear from liens
Workouts
Negotiated agreements between debtors & creditors outside of the bankruptcy process
Includements Workout
-Extension - Payment
-Composition - Payment amount lower
-Benefits - Cost savings
Drawbacks
-Hard to get all creditors to agree
-Holdout problem
Multiple Reorganizations
-Company has filed multitude of Chapter 11 filings
Liquidation
-If continuence of operations worsen financial situation
-Reorganization not possible or gone wrong
Priority Rule of Claims in Liquidaiton
-Secured creditors
-Bankruptcy administrative costs
-Wage of workers for 3 months
Application of Chapter 11 on branches
-Short-Term - Airlines (Good)
-Long-Term - Car manufacturer (Bad)
Chapter 11: Short-term
-Business has fast earnings
-No long-term commitment
-Service is short
Chapter 11: Long-term
-Service - can’t be provided anymore
-Warranty - can’t be provided anymore
-Resale - value will drop
Last changed5 months ago