Questions tagged [bankruptcy]

relating to organizations or individuals running out of cash flows. Additional context specific tags may be used as appropriate.

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Remodeling contractor went broke, didn't deliver services paid for - deductible?

In spring of 2021, I hired a remodeling contractor in Illinois and paid him progress payments totaling about 90% of the contract price. Then he went broke, leaving a mess, which turned out to be less ...
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1 vote
2 answers
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How does the legal "deposit insurance" work if you have large debts, but also liquid funds?

Assuming you have a mortgage of 700K CHF (i.e. minus, debts) But you have 300K CHF in liquid assets on your savings account. If the bank goes bankrupt, you have 100K guaranteed back in Switzerland (...
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Can a SEPA direct debit be refunded in case of bankruptcy?

Payments via SEPA direct debit (customer to business) can, in normal circumstances, be refunded unconditionally from the client's bank's website for eight weeks after the date of payment. Is this ...
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Does obtaining EU banking license directly make retail deposits up to 100k EUR covered by national guarantee fund?

I was unable to find any source connecting directly banking license and deposit guarantee. That is in particular interesting in regard to operating financial businesses after they obtain banking ...
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4 votes
1 answer
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What can I do as a common citizen if it seems like my country is going to be bankrupt like Lebanon or Zimbabwe?

I saw that Lebanon or Zimbabwe are facing very complex problems in their economy. I am from Sri Lanka. I hear news every day that our country doesn't have enough US dollars. So the government has ...
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3 votes
1 answer
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Is it possible for an ETF to go bankrupt?

ETFs have liabilities and expenses. What if the value of the ETF's holdings fall to such a point where the assets do not cover the liabilities and expenses? Is it possible for ETFs to go bankrupt in ...
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3 votes
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Does the distribution of a dynasty trust count as income for purposes of chapter 7 bankruptcy?

Assume a person is one of the beneficiaries of a dynasty trust fund. The dynasty trust is irrevocable and perpetual, set in a US state that allows perpetual trusts. Annual distribution of the trust to ...
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5 votes
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Do foreign debts require special treatment in a bankruptcy petition?

I have foreign debts, and I'm aware that while they cannot be discharged in the USA where I am filing, they still need to be declared. My question is simply if they should be included with the ...
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1 vote
2 answers
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Impact of rising interest rates on default risk of existing junk bonds?

When interest rates rise, we all know that Math shows that the value of a bond will drop, but that's not my question. Intuition says that there's an indirect risk, in that rising rates might hurt ...
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4 votes
2 answers
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How are assets stripped before bankruptcy? [closed]

This New Yorker article says ...hedge funds and private equity have used leveraged buyouts to purchase chains like Sears and Toys R Us, and then stripped their assets, including real estate, en route ...
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12 votes
1 answer
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Why would you risk bankruptcy if you lend more money than you own?

Difficult to summarize the question in just a few words, so let me elaborate here. I am currently reading the Financial Times Guide to Banking by Glen Arnold, section Money creation, and there is ...
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What happens to a company's ticker when bought out by a private company?

A U.S. company files for chapter 7 bankruptcy. A private company in Hong Kong buys the U.S company's IP and brand name to continue the company. The U.S stock ticker for the company still trades. It is ...
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Too Big To Fail, Question about the SEC and Bankruptcy

After watching the movie, I still couldn't understand the doubt and scare the SEC chairman had to ask Lehman to file for bankruptcy. Could someone explain why this was a problem to tell them straight ...
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1 vote
2 answers
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What happened to the shares in this company?

I own some shares in a company OAS that was delisted from Nasdaq. It went to trade at OTC under ticker OASPQ. It later underwent a reorganization (Chapter 11) and is back trading at Nasdaq under its ...
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8 votes
3 answers
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Can (did already) the GME-related hedge funds cover the $5 billion?

Yet another GME question I'm afraid. Straightforward... The GME-related hedge fund(s?) in question lost about $5 billion. Thus, they have to send a cheque for $5 billion† to their broker(s), and/or ...
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20 votes
5 answers
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Why don't most people file Chapter 7 every 8 years?

Please explain to me why more people don't follow a formula like this: Converting all their assets into exempted assets (for which there are tons of options, regardless of your state -- ERISA-...
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1 vote
1 answer
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Why is there heavy volume in a penny stock about to become worthless?

Tailored Brands (TLRD before, TLRDQ after the bankruptcy), owner of Men's Wearhouse and Jos A. Bank, filed for Chapter 11 back in August. It's about to emerge from bankruptcy later this month (end of ...
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2 votes
0 answers
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What happens to wages when you go bankrupt? (England)

I am having a difficult time keeping up with my payments during the pandemic after being furloughed since March. I have contacted StepChange and they have advised me that the best course of action for ...
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37 votes
3 answers
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Why do some companies choose to file for bankruptcy if it has cash to pay off its immediate debts?

Take for example the car rental business Hertz Global Holdings Inc (NYSE: HTZ). On May 22, the company filed for bankruptcy protection. But their balance sheet still looked pretty healthy at the time. ...
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Is it possible to keep mortgage after bankruptcy?

If one declares a bankruptcy, can he or she keep his/her mortgage account and continue repaying it, while erasing all the other debts? In general, is it possible to negotiate to keep some credit ...
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3 votes
2 answers
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Trying to understand what happens with a brokerage firm's customers when it goes bankrupt (case of study: Lehman Brothers)

I'm trying to understand how secure it is to own mutual funds/ETFs, not in terms of market volatility etc., but in terms of judicial security (i.e. what happens to your holdings if the firm goes ...
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-3 votes
1 answer
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Does a high beta indicate a higher risk of bankruptcy?

I recently asked Should retail investors learn and use the capital asset pricing model (CAPM)?, where a good answer mentioned that "beta" is a rough measure of risk, measured based on the ...
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25 votes
5 answers
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If a bank fails, will debt be wiped out?

I have debt to Capital One. If they fail, and whoever the trustee is fails, will the debt eventually get lost in bankruptcy proceedings? Considering the Lehman bankruptcy is still ongoing, well past ...
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1 vote
1 answer
236 views

Does tracking stock become worthless when the parent company becomes worthless?

If a parent company that has tracking stock stock becomes worthless, do the shareholders of the tracking stock have claims on assets (e.g. subsidiaries) that the tracking stock tracks? Or is tracking ...
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1 vote
1 answer
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How do bankruptcy limits on property liquidation work?

I'm reading a page which lists limits on equity that can be kept when filing for bankruptcy. In particular, this page says the following: You have a motor vehicle that is valued at $15,000 and there ...
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0 votes
3 answers
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Why would anyone choose to file for bankruptcy?

A bankruptcy wipes out the debtor's resources to pay creditors. If one has some paid off property but defaults on some unsecured accounts why would he or she want to file for bankruptcy thus risking ...
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1 vote
2 answers
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What happens to the money over the FDIC limit when a bank fails?

I had about $4-5K at Countrywide Financial and when it became bankrupt. I recovered all my money thanks to the FDIC. I didn't encounter any problems when recovering the money, but that was probably ...
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What will happen to Whiting Petroleum (WLL) options after restructuring completes

Whiting Petroleum is currently in chapter 11 restructuring. If the restructuring plan is agreed, existing stock holders will get a 3% stake in they call "new common stock" and bond holders ...
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0 votes
1 answer
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Should I self report a bankruptcy for a rental?

I am looking at a couple of questions on a rental application that I have never been asked before. One is asking to check off if you ever declared bankruptcy. What if the bankruptcy was over seven ...
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0 votes
2 answers
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Why is Hertz still being traded?

Or more generally: How can a firm that files for bankruptcy still be traded? What is a bankrupt firms worth? Disclaimer: I am a complete noob regarding these topics and I probably miss already some ...
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2 votes
1 answer
214 views

Are there high-priced shares of quasi-bankrupt companies that are "traded just for fun"?

Suppose that some successful popular company X, whose shares are highly priced and very actively traded, suddenly ceases to be successful and goes almost completely bankrupt. However, it still exists ...
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1 vote
1 answer
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Can companies distribute all remaning cash to shareholders right before filing for bankruptcy?

Suppose a company is insolvent with negative shareholder's equity, $10 million in debt, and has only $1 million in cash. Can the company declare dividends of $1 million to shareholders prior to filing ...
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0 votes
1 answer
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stockholders equity is higher than total liabilities but the stockholders equity has "()" indicating it is negative. why is that?

Right column of balance sheet full view of balance sheet.
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1 vote
2 answers
456 views

Why isn't my bankrupt stock trading at any price?

Yesterday, a company whose stock I own declared bankruptcy (dont worry I barely have anything in it.) I was curious to see what would happened to its stock price, but so far (2 hours 20 minutes after ...
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1 vote
2 answers
234 views

What would happen if an hypothetical index funds bubble crashes

There are some finance professionals that have warned about an index fund bubble: Index funds bubble I'm assuming that, at some point, index funds will get into a bubble and this bubble will ...
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-2 votes
1 answer
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Ruchi Soya industries ltd shares [closed]

What is wrong with Ruchi Soya industries ltd shares (5% up per day). They are increasing in steps per day. There are 0 sellers, how can someone then buy those shares? Is only price increasing due to ...
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0 votes
1 answer
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What is the purpose of raising money through "first lien notes"?

AMC is raising $500 million in "first lien notes". What alternatives are there to "first lien notes"? Why would a company choose to offer "first lien notes" over other ...
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0 votes
2 answers
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What happens to a short position when a company is nationalized?

The title speaks for itself. Would this be the same as shorting a company that goes bankrupt? So you basically get to keep all your money?
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0 votes
1 answer
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Yes Bank Vs State Bank Of India [closed]

I recently heard the news of Yes Bank Failure. When I compared the some of the Financial Ratios of the Yes Bank with that Of SBI then Yes Bank seemed to perform better(also better than many of the ...
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2 votes
0 answers
51 views

Where are business obligations, like a property lease, on the debt seniority ladder?

Consider the perspective of a REIT. If one of the REITs tenants files for bankruptcy, does the REIT get paid first to satisfy the terms of the lease or do the tenant's bond holders get paid first? I'...
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71 votes
1 answer
9k views

My friend cosigned for a defaulted loan. Should he declare Chapter 7 bankruptcy?

Background: My friend Abe co-signed an auto loan for about $25k with his "friend" Bella, in the USA state of Maryland, about 4-5 months ago. The car was for Bella's use. The deal was that ...
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3 votes
1 answer
117 views

Index fund's assets actual owner

Let's suppose you buy a index fund issued by some financial firm. In that case, who is the actual owner of the fund's underlying shares, you or the financial firm? In case of the answer to the above ...
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20 votes
3 answers
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How to protect an employee's wages before the company declares bankruptcy? [duplicate]

I work for a company which is behind on my salary. The company might file for bankruptcy: how do I claim my salary before then? This question is different from other postings. We are discussing how ...
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2 votes
1 answer
301 views

Clarification on getting paid from a company which filed for Bankruptcy?

I work as an employee for a contracting firm which supplies IT labor resources for their (or) to another contracting firm's clients. As there is a 45 day holding period for the contract firm which i'...
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3 votes
1 answer
600 views

What happens to a company when its parent goes bankrupt?

Among the subsidiaries of the now defunct Thomas Cook Group, some ceased operation together with their parent (e.g. Airtours), while others continue to operate (e.g. Balearics). How exactly is the ...
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2 votes
0 answers
102 views

(Hypothetical) Write off Loss of Cash due to bankruptcy of financial institution

In both Canada and the United States, how do we write off the loss due to bankruptcy of the financial institution in excess of deposit insurance on the tax return for the tax year when the bankruptcy ...
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1 vote
3 answers
501 views

What does "burned through $300 million" mean?

In the book "Antifragility of Islamic Finance: The Risk-Sharing Alternative" by Umar Rafi and Abbas Mirakhor, on page 101 I read the following line: Pets.com, the poster-child company of ...
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2 votes
1 answer
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How would I calculate my taxes for a post-Chapter-11 distribution?

Situation: I held N shares of a company "JUNK", average cost basis $C/share. Cost basis for the shares was $C * N. Some time later, company "JUNK" filed for Chapter 11 ...
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1 vote
1 answer
291 views

Chinese Brother-in-Law in Debt Trouble - What can Chinese Citizens do to Manage?

My brother in law built up a large amount of gambling debt two years ago. I guess in an attempt to save face, he hid a portion - 75,000¥ ($11,187) from his family thinking he could pay it off himself. ...
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1 vote
2 answers
202 views

When is the best time to begin the settlement discussion with credit cards to avoid bankruptcy?

I've read a variety of strategies on timing on settlement discussions with credit cards. The common one seems to be to try after first late payment, and then try again after the next. I have not had ...
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