-->

Sunday, September 25, 2016

Types of Bankruptcy Filings in fraud cases

 Bankruptcy fraud

bankruptcy
 
 
The structure of bankruptcy proceedings varies by jurisdiction, so it is important to study the rules of the relevant jurisdiction when dealing with potential bankruptcy fraud. However, there are common types of bankruptcy filings, and most countries have adopted similar version of at least one. The particular terms might change, but three common strategies of dealing with bankrupt parties are liquidation, reorganisation, and debt adjustment. 

Liquidation:

Liquidation is the most basic type of bankruptcy proceeding and involves accounting for all dischargeable debts the subject owes, identifying all of the subject’s assets, and liquidating non-exempt assets to pay off creditors. This process allows the debtor to get a court or administrative order under which some or all of his debts may be eliminated.

Each jurisdiction determines what exceptions there are in terms of debts that may not be discharged and assets that may not be liquidated. Some debts, like taxes owed or child support payments, might be non-dischargeable, meaning the bankruptcy will not wipe these debts away. Typical items that may not be liquidated include the debtor’s primary residence, items of nominal value, or assets deemed necessary for the debtor to maintain employment.

 However, there might be exceptions to protected assets that allow creditors to reach them.
Frequently, bankruptcy laws will not protect assets that were obtained through fraudulent means, even if they are normally subject to protection. The laws might also only protect assets up to a certain amount (e.g., a debtor’s luxury home is liquidated in bankruptcy and he is only entitled to 20 percent of the sale price).


Reorganisation

Unlike liquidation, which seeks to give the debtor a fresh start, the purpose of reorganisation bankruptcies is to allow the debtor breathing room from creditors so that the debtor can reorganise its financial affairs and continue as a going concern. The hope is that the debtor will be able to pay the creditors back more of the debt in the long run by staying in business than if the entire business was ended and liquidated. However, debt is often restructured and reduced to some extent. Some reorganisation proceedings involve putting the debtor’s business under receivership for a certain period to ensure as much debt is paid back as possible.
Reorganisation bankruptcies are growing more popular, with many countries allowing business entities to declare bankruptcy using this method. Some countries also allow individuals to use reorganisation.


Debt Adjustment:

Debt adjustment is another alternative to liquidation that allows a debtor pay off his debts over time in accordance with a court-approved plan. Under this type of case, the debtor may keep certain property that he would not be allowed to retain in a liquidation bankruptcy. Typically, the court reviews the debtor’s financial situation and comes up with a plan to repay creditors. This type of bankruptcy, if available, is primarily for individuals.

Unknown

About Unknown -

Senior Manager and fraud examiner in mining industry. Head the investigations related to fraud. My role includes driving the culture of integrity And ethics within the Company by conducting regular fraud investigations.

Subscribe to this Blog via Email :

1 التعليقات:

Write التعليقات
Travis Smith
AUTHOR
October 6, 2017 at 1:41 AM delete

Hi there, I check your new stuff regularly. Your story-telling style is awesome, keep doing what you're doing! gmail sign in

Reply
avatar