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What Do Each Of The Bankruptcy Chapter Numbers Mean?

bankruptcy numbers meaningBankruptcy is governed only by federal law. The federal laws of the United States are “codified” within books of various groups, almost like volumes, with each volume receiving a numerical title. For example, Veterans Benefits are addressed in Title 38 of the U.S. Code whereas Title 17 addresses Copyrights. Bankruptcy is found in Title 11 of the U.S. Code. Each title is further divided into Chapters. Under Title 11, the different Chapters refers to the different types of bankruptcy. Here are the types of bankruptcy addressed by each of the chapters within Title 11.

Chapters 1, 3 and 5 of the Bankruptcy Code deals with generic issues within all of Bankruptcy law, like definitions, how Trustee’s are selected, as well as who files claims in the cases and when, to name a few. Chapters 1, 3, and 5 are not Bankruptcy Chapters that someone can elect to file a petition under.

Chapter 7 Bankruptcy deals with basic liquidation of assets for both individuals and businesses. It is the simplest and/or quickest form of bankruptcy. It involves the liquidation of non-exempt assets by a Chapter 7 Trustee, with the goal of obtaining a discharge which acts as a legally binding document absolving the individual from having to pay back any debts that were not repaid from the liquidation of assets. However, there are certain exceptions to these general rules.

Chapter 9 Bankruptcy deals with the resolution of the debts of municipalities. For example, Detroit, MI filed Chapter 9 bankruptcy on July 18, 2013.

Chapter 11 Bankruptcy deals with the financial reorganization of businesses (corporations). It is sometimes used by individuals with substantial debts. Chapter 11 allows a company to continue doing business while adhering to a debt repayment plan (or “Plan of Reorganization”) agreed upon by the bankruptcy court. Most often this debt repayment plan involves a repayment of some, but not all, of the indebtedness owed by the company over a period of a few years, based upon the company’s ability to pay. Each Chapter 11 Plan of Reorganization is unique and molded to the needs of the debtor in that case.

Chapter 12 Bankruptcy deals with the rehabilitation of debts for family farmers and fishermen. In such cases, filing a petition stops collection actions by creditors. A trustee is appointed to evaluate and oversee the case, collect payments from the debtor, and disburse payments to creditors.

Chapter 13 Bankruptcy deals with the rehabilitation of debts for individuals with a source of regular income. Chapter 13 allows for the development of a repayment plan to repay all or part of the debts owed over a three to five year time period. This repayment plan is overseen by a Chapter 13 Trustee. The ultimate goal of a Chapter 13 is to receive a discharge, which acts as a legally binding document absolving the individual from having to pay back any debts that were not repaid (in whole or in part) in the plan. Chapter 13 has certain advantages over a Chapter 7, in that it can discharge certain debts that are excepted from discharge in a Chapter 7.

Chapter 15 Bankruptcy provides a mechanism for dealing with “cross-border” insolvency or debtors of foreign countries to resolve debts owed to creditors in the U. S.

Chapters 8, 10, and 14 are not published within the U.S. Code, and were reserved for Congress to toy with in the future. For more information on bankruptcy law, visit one of the links provided or contact our team today!

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Skymall Filing Chapter 11 Bankruptcy

If you’ve flown any major airline throughout the U.S. in the past several years, you’ve undoubtedly stumbled upon a SkyMall magazine. SkyMall provides passengers with a unique shopping experience and even more unique gifts for purchase. Sadly, SkyMall filed for relief under Chapter 11 of the bBankruptcy Code in November of 2014.

Its largest supporters, including Delta Airlines, have ended their subscriptions due to decreased customer interest. The decision is attributed to the use of in-flight internet connectivity available to all passengers as well as other activities such as e-readers and games, which help to combat the monotony of staring at the back of the seat in front of you.

skymall bankruptcySkyMall reported retail revenue of about $37 million in 2013 but had decreased to 15.8 million in the first nine months of 2014. It listed assets between $1 and $10 million in its bankruptcy petition with total liabilities of approximately $12 million. In January 2015, the company laid off 47 employees, about 33% of its total work force. The future of the company is still uncertain, as the company may have a potential buyer but a deal has yet to be agreed on. Until then, you may want to start stocking up on essentials like this Serenity Cat Pod.

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5 Largest Bankruptcy Cases of the Last 20 Years

Cities, municipalities, and even large corporations file bankruptcy in addition to individuals, couples, and local businesses. While individual, couple, and local business bankruptcy filings hit closer to home, they very rarely make the news or become of national importance, like those of larger national or international corporations do. The reasons behind large company bankruptcy filings are vast but most can be laid at the door of an economic downturn while others, riding high on the crest of an ever-growing bubble bound to burst at any moment, can be faulted for “creative bookkeeping.” Here, we provide a list of five corporations in order of lowest to highest declared assets that have filed bankruptcy in the last 20 years.

#5: CIT Group, Inc

CIT Group (FKA Commercial Investment Trust) provided commercial financing, lending, leasing and advisory services to more than 30 industries since its founding in 1908. Recently CIT became a bank holding company and, from 2004 to 2007, qualified for and received $2.3 billion in TARP (Troubled Asset Relief Program) federal funds. CIT filed for relief under Chapter 11 of the Bankruptcy Code on November 1, 2009 with $80.4 billion in declared assets. It emerged from bankruptcy 38 days later on Dec. 10, 2009.

#4: General Motors

Just as Chrysler had faced financial difficulties, General Motors Company was forced into bankruptcy in 2009 as a result of the lagging economy. GM filed for relief under Chapter 11 of the Bankruptcy Code on June 1, 2009 with declared assets of $91 billion and emerged from bankruptcy just over a month later. It was financed in part by the U.S. government which still owns a 27% stake in the company.

#3: WorldCom

As one of the largest telecommunications companies in the U.S. during the 1990s, WorldCom propped up its stock using “creative accounting” methods, providing a false appearance of growth and profitability. It filed bankruptcy on July 21, 2002 with declared assets of $103.9 billion. At the time, it was the largest company to ever file for Chapter 11.

#2: Washington Mutual

Washington Mutual, a savings bank holding company, experienced financial collapse when a 10 day period of bank runs in 2008 resulted in withdrawals of $16.4 billion. Washington Mutual Bank, under Washington Mutual’s control, was seized and placed into the receivership of the FDIC. The company filed for relief under the Bankruptcy Code on September 26, 2008 with declared assets of $327.9 billion.

#1: Lehman Brothers

The fourth largest investment bank in the U.S., Lehman Brothers experienced a devaluation of its assets which, in turn, resulted in a huge loss of clients. Having done business globally in banking, research, and trading, Lehman Brothers filed for bankruptcy relief on September 15, 2008 with declared assets of $691 billion.

More information on bankruptcy:

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