AFF 604 Chapter Notes - Chapter 27: Chapter 27, Mci Inc., Dalkon Shield
22 May 2017
School
Department
Course
Professor
Document Summary
Between 20,000-80,000 u. s. businesses seek bankruptcy protection every year (publicly traded corporations represent a small fraction) Most insolvent firms seek protection by voluntarily filing a petition with the federal bankruptcy court. Others are forced into bankruptcy by creditors. Chapter 7 (liquidation) or chapter 11 (reorganization) of the bankruptcy code. Insolvency not a prerequisite, some businesses choose a strategic bankruptcy in order to avoid liabilities. Shutting down an insolvent business and fairly distributing its remaining assets. Trustee appoints a bankruptcy trustee to operate the enterprise and oversee the liquidation, subject to the federal bankruptcy court"s oversight. Supervises the collection and sale of all business assets and the distribution of the proceeds to those with valid claims. At the end, debtor firm is dissolved. Creditors have little influence, trustee has a fiduciary duty to act in their best interests. Debtor/senior management continues to operate the business and main control of its assets.
