Benefits Of Filing Bankruptcy – What?

Apr 16th, 2014 | By | Category: Debt

General Motors and Chrysler went to Washington to ask for more aid to save their struggling industries, the figure that they tossed out was $21.6 Billion. They then went on to point out that if they were required to declare Chapter 11 bankruptcy, the figure that would cost might be as high as $110 billion, and might actually lead to liquidation and even cost millions of jobs.

When filing bankruptcy, a company chooses whether to file for Chapter 11 or Chapter 7 protection. When a Chapter 11 bankruptcy is filed, access to goods and restrictions are put on the company while it attempts to refinance debt and rearrange its affairs; in the end, companies usually emerge from Chapter 11 bankruptcies and continue to operate. However, in Chapter 7 bankruptcy, assets are liquidated, with a view to pay creditors; the liquidation of all assets is chaired by a bankruptcy trustee or judge-pension plan assets are usually liquidated and plans are dissolved.

We’re hoping that doesn’t come as a shock. If you don’t file and pay your taxes, however, the things that could happen to you are pretty shocking. Julius Green, CPA and tax practice leader for ParenteBeard in the Philadelphia region, explained to us the potential consequences of letting April 15 come and go tax-free. Granted, you aren’t guaranteed to suffer these consequences, and everyone’s tax situation is different, but here are a dozen terrible things that could happen if you don’t …

Standard & Poor’s reports on GM and Chrysler have repeatedly pointed out that the bankruptcy risk remains high for both companies-for this year and for next year, as well. It’s small wonder that talk of bankruptcy is so often in the sky when speaking about the auto manufacturers with this type of assessment.

Investigating More About Benefits Of Filing Bankruptcy

Of course, many bankruptcy specialists thought that GM and Chrysler were being a little disingenuous with their numbers when it came to filing for bankruptcy. This was intelligible. No company wants to go through bankruptcy. Filing for bankruptcy might actually work out for the sake of the auto companies, on the other hand.

Yes, believe it or not, there are benefits to filing for bankruptcy. Although it was once a horrible proposition, there are ways that a company can actually come out ahead by filing for Chapter 11 protection.

If GM and Chrysler filed for Chapter 11 protection, it might be in a position to force creditors and unions and dealers to accept a number of the concessions that the companies have been offering. It might also work as a marketing tool in order to obtain the American consumer to rally behind a company that desperately needs to survive.

Right now, the best wish that the auto companies have is to somehow deliver a comprehensive recovery plan that will show the government and consumers that they’re on the correct path. Otherwise, as long as the auto manufacturers keep putting out stopgap measures to delay the inevitable, they will never get the trust of the American consumer to purchase vehicles from them.


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