\GoBillsInDallas/ Posted February 3, 2014 Share Posted February 3, 2014 http://www.democratandchronicle.com/story/money/business/2014/01/30/local-companies-sued-in-kodak-bankruptcy/5051829/ Kodak files for Chapter 11 bankruptcy. In Chapter 11, the intent is to keep the company operational. In Chapter 7, the intent is to liquidate the company. Chapter 11 allows a company that is deeply in debt to restructure itself, as part of a way to keep the company running. The company's creditors can work with the company to come up with a plan, or they can propose their own plan, and all of this is subject to oversight and approval of the court. One of the offshoots of Chapter 11 is to make sure that all of the creditors left "holding the bag" get their equal share of any money that is available. In other words, Creditor A cannot get 100% of the money owed him while Creditor B only gets 10%. They all have to get the same percentage. The way that they do this is to set up a trust company as part of the bankruptcy that examines all of the money available and takes legal action (if needed) to make sure the creditors get their fair share. However, one of the ways to do this (perfectly legal) is for the trust company to sue every business that received money from Kodak in the period 90 days before the bankruptcy to get the money back (with interest), no matter how small the amount is. This forces most of the defendants to pay back the money, since the legal costs to fight it would in most cases cost more than the original dollar amount. Link to comment Share on other sites More sharing options...
keepthefaith Posted February 3, 2014 Share Posted February 3, 2014 http://www.democrata...ruptcy/5051829/ Kodak files for Chapter 11 bankruptcy. In Chapter 11, the intent is to keep the company operational. In Chapter 7, the intent is to liquidate the company. Chapter 11 allows a company that is deeply in debt to restructure itself, as part of a way to keep the company running. The company's creditors can work with the company to come up with a plan, or they can propose their own plan, and all of this is subject to oversight and approval of the court. One of the offshoots of Chapter 11 is to make sure that all of the creditors left "holding the bag" get their equal share of any money that is available. In other words, Creditor A cannot get 100% of the money owed him while Creditor B only gets 10%. They all have to get the same percentage. The way that they do this is to set up a trust company as part of the bankruptcy that examines all of the money available and takes legal action (if needed) to make sure the creditors get their fair share. However, one of the ways to do this (perfectly legal) is for the trust company to sue every business that received money from Kodak in the period 90 days before the bankruptcy to get the money back (with interest), no matter how small the amount is. This forces most of the defendants to pay back the money, since the legal costs to fight it would in most cases cost more than the original dollar amount. Familiar with this law. They basically want to make sure that some creditors weren't given preference over others just before the **** hit the fan. In essence, the bankruptcy starts before it's actually filed when it comes to creditors. Link to comment Share on other sites More sharing options...
Nanker Posted February 3, 2014 Share Posted February 3, 2014 (edited) Interesting. Now tell us how the primary claim position on the corporation's assets in an insolvency that corporate bond owners have can be dismissed unilaterally by The POTUS. Edited February 3, 2014 by Nanker Link to comment Share on other sites More sharing options...
3rdnlng Posted February 3, 2014 Share Posted February 3, 2014 Interesting. Now tell us how the primary claim position on the corporation's assets in an insolvency that corporate bond owners have can be dismissed unilaterally by The POTUS. The King Fixed for you. Link to comment Share on other sites More sharing options...
Nanker Posted February 3, 2014 Share Posted February 3, 2014 Thank you. I've been corrected. Time for all of us to get in line or else... http://youtu.be/GiuHqmlRjTE Link to comment Share on other sites More sharing options...
GG Posted February 5, 2014 Share Posted February 5, 2014 Familiar with this law. They basically want to make sure that some creditors weren't given preference over others just before the **** hit the fan. In essence, the bankruptcy starts before it's actually filed when it comes to creditors. 90 day preference period prior to bankruptcy filing is the law of the land. Link to comment Share on other sites More sharing options...
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