Distinguish between Chapter 7 and Chapter 11 bankruptcies. Cite specific examples. Identify any cases where equity...

Distinguish between Chapter 7 and Chapter 11 bankruptcies. Cite specific examples. Identify any cases where equity holders have received payout in bankruptcy?

Solutions

Expert Solution

The main difference between a Chapter 7 bankruptcy and Chapter 11 bankruptcy is that under Chapter 7 bankruptcy, the debtor's assets are liquidated to pay lenders (creditors), while in Chapter 11 bankruptcy, debtors negotiates with lenders to change the terms of loan rather than to sell off assets.
If a company declares Chapter 11 bankruptcy, shareholders have chance for survival and to recover. Shares might recover with it.
If it declares Chapter 7, the company is dead and also the shares. Shareholders are at last for repayment of their investment.
Example of bankruptcy payout - The amount of the payment a common shareholder will receive is related to the proportion of ownership owned in a bankrupt company.
For example, lets assume a common shareholder owns 0.5% of the firm. If the firm has $100,000 to pay to its common shareholders after bankruptcy, that owner will receive a cash payment of $500.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Provide examples of companies that filed for Chapter 7 and Chapter 11 bankruptcy.

Distinguish between the roles of an internal and an external auditor. Cite at least two examples...

Distinguish between the roles of an internal and an external auditor. Cite at least two examples of auditing procedures that might reasonably be expected of an internal auditor but not an external auditor. Which type of auditor would you rather be? Why?

what is the difference between a chapter 7 and a chapter 11 backrupcy action? what is...

what is the difference between a chapter 7 and a chapter 11 backrupcy action? what is usually included in the plannif reorganization field as part of a chapter 11 reorganization?

Cite two examples of where Ion Exchange is used in Industry (any method, anionic, cationic or...

Cite two examples of where Ion Exchange is used in Industry (any method, anionic, cationic or mixed bed), what is being removed, and why.

what is the difference between a chapter 7 and chapter 11 bankrupcy action? what financial statement...

what is the difference between a chapter 7 and chapter 11 bankrupcy action? what financial statement must a company file during chapter 11 reorganization?

Chapter 11 - E11-7 The stockholders' equity section on the December 31 balance sheet of Chemfast...

Chapter 11 - E11-7 The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following amounts: Contributed Capital Preferred Stock (par $20; authorized 10,000 shares, ? issued, of which 1,000 shares are held as treasury stock) $ 98,000 Additional Paid-in Capital, Preferred 12,740 Common Stock (no-par; authorized 20,000 shares, issued and outstanding 5,700 shares) 552,900 Retained Earnings 27,000 Treasury Stock, 1,000 Preferred shares at cost 9,350 Assume that no shares of treasury stock have been...

Consider examples in Chapter 11 of the Galanti text where cultural behaviors and personality traits were...

Consider examples in Chapter 11 of the Galanti text where cultural behaviors and personality traits were diagnosed as signs of mental illness. Which examples would you foresee as possibly being present in your geographical area of the United States (or elsewhere, if you are outside of the United States)? While working in health care, how might you best watch for and be prepared for these potential issues with patients in your area? Parameters: The journal submission will be a minimum...

1. a) Distinguish between implicit and explicit deposit insurance. Give specific examples to illustrate their differences.(8...

1. a) Distinguish between implicit and explicit deposit insurance. Give specific examples to illustrate their differences. b) Explain the “moral hazard” behaviour induced by deposit insurance. c) Explain two (2) features that can be built into a deposit guarantee scheme to mitigate the moral hazard discussed in part (B).

list any five potential specific functions of an integument in animals. Give examples where necessary

Distinguish between the levels of prevention. Provide two (2) examples of each type of prevention. Identify...

Distinguish between the levels of prevention. Provide two (2) examples of each type of prevention. Identify the circumstances and settings in which each level is indicated. Explain your answers.

Subjects