COMM231 Chapter Notes - Chapter 27: Unsecured Creditor, Unsecured Debt, Secured Creditor
14 Feb 2016
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Document Summary
Businesses fail for many different reasons, even when the economy is strong. A body of law has developed, called bankruptcy and insolvency law, to deal with failed businesses to ensure that all stakeholders are dealt with as fairly as possible. Bankruptcy and insolvency law is a highly technical legal field and here you only will be exposed to the broad principles. In this chapter you will need to understand: The use of informal arrangements with creditors to avoid entering into bankruptcy. Bankruptcy vs. insolvency, the difference in meaning between the terms and why you might move from insolvency to bankruptcy and why you might not. Highly trained professionals (accountants, lawyers having expertise) will need to be retained to deal with a bankruptcy or insolvency. Some of you may choose this area as a career. The bankruptcy process, what are the key principles governing it, what is the difference between preferred, secured and unsecured creditors, and distributions to creditors.
