Chapter 11 Business Bankruptcy: Take a case study and show how it has helped large corporations reorganize their debt

As a result of the financial crisis that became evident in 2008 and is still going on today, there have been more large businesses using the bankruptcy laws than in any time in recent history. Headlines in the daily papers and the top story of the television newscast is often that another major company is in bankruptcy. The two that got the most attention in the past several months are the auto makers General Motors and Chrysler Corporation. Both used Chapter 7 of the bankruptcy code to eliminate much of their historical debt and, very importantly, to restructure their business. It is the combination of the two that is very important.

By eliminating large amounts of old debt, the companies freed up a great deal of capital that was not helping them build their current business but only paying on liabilities incurred many years ago. In addition, the bankruptcy laws allowed the companies to make changes in the way they operate that would not have been allowed under normal circumstances. The two best known changes that both companies made under the protection of the bankruptcy court were the elimination of a number of their retail dealers (those they considered marginal or unprofitable) and the reworking of their union contracts and pension funds.

Reorganize Debts to save Business: Connect to Bankruptcy Attorney Now

Without the use of bankruptcy, significant changes in either of these two areas would have been impossible to make. What many people learned in following these events is that bankruptcy laws take precedence over all other statutes whether they are state or federal laws. The individual states had very strong laws protecting the auto dealers franchises making it very difficult for the manufacturer to exert much control over the dealer and virtually impossible to close a dealer. With bankruptcy protection, these states laws were pushed aside.

The same is true with federal statutes regarding the union labor contracts and pension funds. There are a host of federal laws and regulations covering both. However, by using the bankruptcy laws effectively, these laws were overridden with new agreements which completely restarted how the contracts work and the obligations of the companies to the pension funds.

These same bankruptcy statutes are largely available to individuals. These businesses show what powerful tools the bankruptcy laws can bring to the aid of someone who needs serious financial help. For a person to use these statutes to get their financial house in order, the first step is a call or conference with a local bankruptcy attorney who can show them how to take advantage of this help.