1. Xu Che

2.  Bankruptcy is a legal status of a person or organization that cannot repay the debts it owes to creditors.  Liabilities exceed Assets  Negative Equity

3.  External business conditions  Internal business conditions  Severe monetary problems

4. Bankruptcy Law  Chapter 7- Liquidation for individual and businesses  Chapter 11- Reorganization  Chapter 13- Personal

5.  The company stops all operations and goes completely out of business.  Collateral Assets serves as protection for a lender against a borrower’s default.  Remaining Assets are liquidated

6. 1. Secured creditors- collateral 2. Unsecured creditors - employees, suppliers, banks, government (taxes) and bondholders 3. Stockholders - preferred stock holders and common stock holders

7.  Company still run business and control the bankruptcy process.  Voluntary or Involuntary A corporation which continues to operate its business under chapter 11 bankruptcy proceedings is a debtor-in-possession.

8. Federal Court will appoint one or more committees to represent the interests of creditors and stockholders in working with the company to develop a plan of reorganization to get out of debt.  A Vote on the plan - 2/3 groups say Yes- Pass  Cancel the existing equity shares

9.  Success - reshaping the company into a profit entity  What if it fails? - Chapter 7

10.  How many firms filed Chapter 11 from Year 1993 to 2007? A. 521 B. 821 C. 1221 D. 1621  How many firms emerging from bankruptcy as public companies during this period? A. 216 B. 516 C. 816 D. 1216

11. Year Chapter 11 bankruptcy filed Number of firms filed chapter 11 Number of firms successfully re-structured 1993693 1994549 1995699 1996646 1997638 19981056 199914615 200017917 200125923 2002211550 200316033 20048412 20057822 2006452 2007351 Total1621216

12.  Bankruptcy is a legal status of a person or organization that cannot repay the debts it owes to creditors.  Three main causes of Bankruptcy  Chapter 7- Liquidation -Order of payment  Chapter 11- Reorganization

14.  “Emerging from Bankruptcy with When-Issued Trading,” Raymond M. Brooks and J. Jimmy Yang Financial Review (The), vol. 47, pp. 445-467, (Aug 2012)  http://www.morebusiness.com/running_your_business/profitability/Busines s-Bankruptcy.brc http://www.morebusiness.com/running_your_business/profitability/Busines s-Bankruptcy.brc  http://www.sec.gov/investor/pubs/bankrupt.htm http://www.sec.gov/investor/pubs/bankrupt.htm  http://en.wikipedia.org/wiki/Debtor_in_possession http://en.wikipedia.org/wiki/Debtor_in_possession  http://www.totalbankruptcy.com/overview/basics/chapter7-chapter13- comparison.aspx http://www.totalbankruptcy.com/overview/basics/chapter7-chapter13- comparison.aspx  http://en.wikipedia.org/wiki/Bankruptcy#United_States http://en.wikipedia.org/wiki/Bankruptcy#United_States  http://www.economist.com/node/13782942 http://www.economist.com/node/13782942