Bankruptcy
Submitted by tao123 on June 26, 2008
Category: Business
Words: 451 | Pages: 2
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Bankruptcy Simulation Summary
According to U.S.courts.gov, for the 12 month period ending June 30, 2006, the total number of businesses which filed chapter 7 was 21,857 versus chapter 11 filings of 5,475, a ratio of 4:1 (2006). Chapter 7 bankruptcy is the liquidation of assets to pay creditors based on the creditor’s level of priority. Whereas, filing for Chapter 11 allows businesses to continue to operate while developing and implementing a plan for repayment of debt to creditors within three to five years. The entire process for filing Chapter 11 bankruptcy can be very timely as the reorganization plan requires approval from creditors and the court. According to the simulation, filing for chapter 11 can take over six months for filing. U.S. courts.gov states “…the debtor may file a plan of reorganization during the first 120-day period after the petition is filed”...