Corporate Bankruptcy
Building a successful business is very difficult and when doing so some may encounter financial hardship. The law has established a process that can help rescue businesses. This is called bankruptcy. What is bankruptcy to a company? How does bankruptcy rescue businesses? The reader will understand the meaning of bankruptcy to a corporation, be familiarized with types of proceedings, and identify with businesses that have been rescued by bankruptcy proceedings.
Bankruptcy is a federal system of statutes and courts which permits persons and businesses which are unable to pay debtors or in some cases face potential insolvency, to place their financial responsibilities under the control of the bankruptcy court (www.law.com). The way this works is that when the business's debts exceed its assets or is unable to pay, the business can file a petition with the bankruptcy court. This called filing for voluntary bankruptcy.
If a business does not file for bankruptcy the unpaid creditors can file an "involuntary" petition to force the business into bankruptcy (www.law.com). It is better and most common for businesses for file voluntary bankruptcy (www.law.com).
There are three types of petitions: Chapter 7, Chapter 11 and Chapter 13 (www.law.com). The most popular is for business to petition is under Chapter 7 (www.law.com). In Chapter 7, businesses are appointed a trustee by the court (www.law.com). The trustee is like a financial wizard. The trustee counts up the businesses assets with the plans of keeping them from the bankruptcy, pays debts the business owes with paying taxes first (www.law.com). The trustee then focuses on paying secured debts such as mortgages and lastly unsecured debts (www.law.com).
Then the court officially declares the business bankrupt and discharges the unpayable debts, this is a lost for the creditors (www.law.com). Filing a bankruptcy petition will suspend all existing legal actions like foreclosure and other imposition of judgment. Businesses cannot file for bankruptcy again for seven years (www.law.com).
Chapter 11 bankruptcy allows a business to reorganize and refinance to prevent dislocation of the organization (www.law.com). Most of the time there is no trustee appointed, but the business is given time to present a plan of reorganization (www.law.com). This does not always work well for busines...
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...mart.com). This is new recovery and Kmart has a long way to go according to ABC news.
In conclusion, bankruptcy is a way for businesses to rescue themselves when in financial hardship. Not every company will make it. Some may be lost, but the law provides every business the opportunity to fight for it's survival. 3M, NationsRent, and Kmart have all made it through and they are looking for a promising future.
Work Cited
3M Company web page. Http://www.3m.com
Company News; Citing Weak Demand, 3M Says it is Cutting 125 Jobs, New York Times, 2003.Section C. P.4. Http://www.newyorktimes.com
Law Dictionary, http://www.law.com
Lorrie Grant. Kmart should exit Chapter 11 quietly, expert say. USA Today. April 2004
Minnesota Mining & Manufacturing Company (3M)" International Directory of Company Histories, Vol. 26. St. James Press, 1999. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.: Gale Group. 2006.
Http://galenet.galegroup.com/servlet/BCRC
NationsRent Company web page. Http://www.nationsrent.com
Troy Bryant. NationsRent, Hoover.com, http://www.hovers.com/nationsrent/--ID_57275--/free-co-factsheet.xhtml. retreived July 12, 2006
We started our research by reading through the discussions posted within the Topic of Research. From there we read the recommended pages of the text, 20-2, 20-3, and 20-4 regarding the liquidation process. Using the CCH Tax Research Network, we used a selected content search, Federal Tax--Federal Tax Editorial Content--Standard Federal Tax Reporter (2014), to research the following laws: Section 331(a), 336(a), and 6901(a). We also used the Citator in CCH to review the facts and decisions shown in the liquidation cases of Kennemer and Al Zuni of Arizona.
“CNS Inc. to regain control of Breathe Right international sales from 3M” The Business Journal Minneapolis-St.Paul: 11 Oct. 1999
Over the past couple of years Detroit has been faced with many layoffs. Two major causes for layoffs were the Big Three Automobile companies and Detroit filing for bankruptcy. July 2013, Detroit had to file for bankruptcy. With filing for bankruptcy, it caused many people to lose their jobs because Detroit was trying to cut back on spending. People many people suffered from Detroit filing for bankruptcy, because people from outside the city come to the city to work for big corporations mainly in downtown Detroit. Over the years the automobile companies have also been hit with a major crisis due to a decline in sales. While the city dealt with the Big Three Crisis and bankruptcy Detroit’s communities and foreclosures began to be a problem.
The Minnesota Mining & Manufacturing Corporation (3M) was founded in 1902. It reported sales revenues of $16.7 billion during the year 2000. These revenues came from 3M's six business divisions: industrial; transportation, graphics, and safety; healthcare; consumer and office; electro and communications; and specialty materials. All business divisions were profitable in 2000. The same year, the company made more than 60,000 products and about $5.6 billion sales came from products that had been introduced during the prior four years and another $1.5 billion came from products introduced during 2000. Annually, more than 75,000 employees worked to create more than 500 new products. The company was recognized for its vertical organizational structure, with businesses established by technologies and markets. It was one of the most admired corporations in America and was awarded the National Medal for Technology, the U.S. government's top award for innovation, in 1995.
Kmart is a huge vintage company that had peeked at one time and now is
Himmelstein, David U., M.D., et al. "Medical Bankruptcy in the United States, 2007: Results of a National Study." The American Journal of Medicine 122.8 (2009): 741. ProQuest. Web.1 Dec. 2013.
The re-use of an insolvent company is protected by UK insolvency law. It helps to protect the interests of investors and creditors are not damaged by a lack of transparency relating to the director's involvement with an insolvent company, and continued involvement with its phoenix.
Timeline of this case should be clearly organized in order to better understanding this case. In 2009, Poor Son transferred Rich Grandson to Parent. In 2010, Poor Son filed a voluntary petition for reorganization under Chapter 11 of the US bankruptcy code, and Parent deconsolidated Poor Son from statements. In 2011, Poor Son filed an action against Parent seeking to void the transfer of Rich Grandson. In May 2012, the bankruptcy court held a selection meeting in which it considered competing plans of reorganization submitted by four bidders. In June 2012, OtherCo, an unrelated party, became the wining plan sponsor. In July 2012, OtherCo rescind its offer because the bad evonomic condition. In December 2014, the bankruptcy court recommended
On January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection becoming the largest retailer ever to do so in U.S. history. Most industry analysts attributed the immediate cause of the company's bankruptcy filing to a dull holiday season and stiff competition from WalMart and Target as the chain's more fundamental problem. But competition wasn't the root cause of Kmart's consistently poor performance. The real reason for Kmart's poor performance is that Kmart never had a marketing strategy. Kmart completely misunderstood its market and was positioning itself in the wrong direction.
Himmelstein, D., Thorne, D., Warren, E., & Woolhandler, S. (2009). Medical bankruptcy in the United States, 2007: results of a national study (clinical research study). Retrieved from ProCon: http://healthcare.procon.org/
By the 1980s, just before the rise of Wal-Mart, Kmart had become complacent. It believed it would be the king of discount retailing, now and forever. It didn't perform an accurate SWOT analysis, but to be fair, who could have seen the rise of Wal-Mart to the position of the world's number-one retailer? Still, as Wal-Mart built new stores in town after town, supported by cutthroat pricing and solid logistics, Kmart's complacency would cost them. Part of the problem was that as Wal-Mart was pouring money into information technology (IT), Kmart's IT budget continued to shrink – not just once, but several years in a row. While Wal-Mart's logistics and supply chain management got sharper, Kmart's stagnated. And while Wal-Mart was able to squeeze more value out of its stores and its systems, Kmart lost ground. By the time Kmart had finally decided to start devoting more resources to IT, it was so far behind Wal-Mart that catching up would have been a near-impossible task without the recession in the early part of this decade. With the effects of the recession taken into account, Kmart instead was consigned to also-ran status among discount retailers.
3M's innovation culture comes from the times when the five entrepreneurs who created a company to explore a mine of what they thought being corundum, realized that all they had was a low grade anorthosite, which would not meet the requirements of the booming abrasive industry as they initially believed. Quickly they had to adapt and focus on producing sandpaper products. But it was with McKnight, who joined the company in 1907 has a bookkeeper and later would become Chairman for more than 40 years, that 3M really developed a culture towards systematic innovation. Since then, 3M has been characterized by McKnight's principles of supportive management which encourages employee initiative and innovation:
Among the study’s findings were that the deciding factor of the predictor of bankruptcy should not be only a few ratios, as the measure of a company’s financial solvency may differ as the firm’s situations differ. The important question is to which ratios are to be used and of those ratios chosen, which ratios are given priority weight.
A person who is unable or unwilling to pay his or her debts may declare bankruptcy. The state of being solvent means that one has the ability to pay his or her debts. However, insolvency means that a person cannot pay his or her debts. In order to declare bankruptcy, a person must file a petition for bankruptcy in a bankruptcy court. A voluntary bankruptcy proceeding is started by the person who is declaring bankruptcy, whereas an involuntary bankruptcy proceeding is started by the creditors of the bankrupt person. A creditor who is not a party to the bankruptcy proceedings, but who has an interest in the proceedings, may file an ex parte application with the bankruptcy court.