Chapter 7:Bankruptcy Liquidation
Introduction to bankruptcy liquidation (Chapter 7)
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Have they actually been forced to pay?
Its still in the woodworks so not yet. There has been no talk of a government bailout for these Average Joe’s who owe tens of millions.
There are stocks that you in fact have to pay off the debt in the company. Google “Brisconnections” (a company in Australia). The people who bought the stock recently owe $2 per share. The stock is at $0.01 and no buyers. So heaps of un-educated investors have been trapped into $mils of debt. The investors are getting taken to court cause they cant pay up.
No, the stock/equity can only go to zero. It cannot be negative. If I own a share of GM, the worse thing that can happen is that it becomes worthless. I wouldn’t ever “owe” money to GM’s unsecured creditors.
Sal, if the assets were only 5 mil, and there only enough for Subordinate to get 1 mil back (instead of 2 mil)……doesnt the equity holders owes the Subordinates the difference (1 mil)? dont they have to pay?
Well layed out and thanks for going to this effort. I think it was worth mentioning that many people over value their assets as you pointed out and don’t realize the danger that can present down the track.
if you file for bankruptcy it’s not the end..I am in process of recovering or my husband is..please visit my blog
Even when your Assets are greater than your Liabilities, you can still go bankrupt if you have 0 cash and are unable to pay the interest payments you owe on the debt. This is why there is the popular phrase “Cash is King”.
Thank you, I might have missed that.
he is talking specifically about chapter 7, bankruptcy liquidation. Where, the owners just decide that they do not want to run the company anymore, for whatever reason, that is when they file for Chap 7, bankruptcy liquidation.
See this video once again, you’ll get your answer.
If the company had 7 million in assets and 6 million in liabilities then why would it file for bankruptcy?
that could just be australian law, or an australian loop hole (most likely) that the company crawled through and can legally demand the money from its shareholders