CX Flyboy
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Chapter 11 And Others?

Wed Dec 11, 2002 1:32 pm

I know this has been briefly mentionned on other topics, but I have little knowledge of the way things work in the US with regards to bankrupcy. I think I understand Chapter 11 as it has been explained on some other topics. How about the other Chapters? There's Chapter 13 right? So that means apart from 11, there are 12 other chapters? Can someone explain each one?
 
B747-437B
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RE: Chapter 11 And Others?

Wed Dec 11, 2002 1:41 pm

The three "chapters" of Bankruptcy law in the US can be explained as :

a) Chapter 11

This is bankruptcy re-organization for corporations. You get to defer and restructure payment on existing debt PROVIDED you can continue to make payments and operate on debt/revenue being incurred/earned on a current basis. The creditors have a say in how you run your business through the creditor's committee and the bankruptcy trustee with the court being the final authority.

b) Chapter 13

Essentially the same as Chapter 11, except for individuals. You get to reorganize your debt and defer/restructure your payment of that to fit your financial circumstances, subject to approval of the court.

c) Chapter 7

A straightforward liquidation of corporate assets to pay off the debt owed.
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CX Flyboy
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RE: Chapter 11 And Others?

Wed Dec 11, 2002 2:02 pm

So if an airline cannot pull out of Chapter 11 it goes into Chapter 7?

How about Chapters 1-6, 8-10 and Chapter 12? Does it go higher than that?
 
kaitakfan
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RE: Chapter 11 And Others?

Wed Dec 11, 2002 2:19 pm

There are no more then three chapters of Bankruptcy in the USA as B747-437B mentioned. I am pretty sure that if things do not get any better in Chpt 11, Chapter 7 is the final step.
 
B747-437B
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RE: Chapter 11 And Others?

Wed Dec 11, 2002 3:00 pm

Correct, there are no other significant "chapters" of Bankruptcy code.

Chapter 7 is the final solution. The corporate entity ceases to exist after Chapter 7.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
CX Flyboy
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RE: Chapter 11 And Others?

Wed Dec 11, 2002 3:09 pm

So, we have 7, 11 and 13. Well, there's logic for you!!

Thanks for your replies!
 
hkg_clk
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RE: Chapter 11 And Others?

Wed Dec 11, 2002 10:36 pm

I'm no US lawyer but here's how I think it works.

US bankruptcy law is contained in title 11 of the United States Code.

Within title 11, the bankruptcy laws are divided into chapters (merely for easy reading, like the way books are divided into chapters 1, 2, 3.....).

It happens that the specific provisions relating to liquidation are in chapter 7 of title 11, corporate reorganisations in chapter 11, and provisions relating to individuals in chapter 13. Other chapters exist, but may relate to more general things.

The US code is here http://uscode.house.gov/download.htm and if you click on title 11, you'll get the bankruptcy chapters.

Hope this helps!
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CX Flyboy
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Joined: Sun Dec 26, 1999 6:10 pm

RE: Chapter 11 And Others?

Wed Dec 11, 2002 11:43 pm

I see. Thanks, that does help!!

I thought it was something like the MI5/MI6 in the UK, where 1-4 used to exist, but not anymore.