...When is it bankruptcy fraud? Bankruptcy serves a vital role in the economy. Without bankruptcy, some debtors would never be able to dig their way out of debt. With no ability to discharge debts, they would have to pay their debt by going to prison. At the very least, debtors with no way out could never recover and become contributing members of society. Bankruptcy should be viewed as a tool for those that intend to repay their debts but ultimately can’t. Unfortunately, there are a few that try to cheat the system. This is known as bankruptcy fraud. The bankruptcy process is complex, and there are many regulations in place to make sure it isn’t taken advantage of. While many who commit bankruptcy fraud do it on purpose, there are some who do it in ignorance. Here are a few things to keep in mind in order to avoid bankruptcy fraud. Types of bankruptcy fraud Bankruptcy is intended to be for those that cannot repay their debts on their own. Consequently, there is a limit to how much income a bankruptcy filer can make. There are many different types of income and all of them must be declared in the bankruptcy. Failing to report income, either on purpose or on accident could result in your case being thrown out. In order to prevent bankruptcy from being misused, there is a limit to how often a person may file for bankruptcy. Falsifying information in order to file bankruptcy before the minimum waiting period is another form of bankruptcy fraud. Yet another dishonest...
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...Chapter 25 Bankruptcy, Reorganization, and Liquidation ANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS 25-1 Bankruptcies occur in firms of all sizes. Small firms, with fewer creditors, are often able to work out informal settlements and thus avoid the time and expense of formal bankruptcy. Ross Corporation, described in Question 3, is probably too large, and it has too many creditors, to work out an informal settlement. If Ross attempted to resolve its problems informally, the attempt would probably fail, and then it would have to resort to the federal bankruptcy court. Note that if there had been fewer creditors, and particularly if most of the debt were owed to a few banks, then the chances of an informal resolution would be better. But with many holders of the publicly traded bonds, 15 banks, and 250 unsecured creditors, there would probably be too many holdouts to reach an informal resolution. 25-2 The judge in a federal bankruptcy proceeding can abrogate all contracts, including labor contracts. If a contract requires payments greater than the company’s cash flows can support, then the judge can order that payments be scaled back to a level the company can afford. Labor contracts were abrogated for a number of firms that were hit with asbestos suits, notably Johns Manville, and currently several airlines are in bankruptcy proceedings under which labor contracts will likely be changed. 25-3 a. As noted above, is probably too large, and it has too many creditors...
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...countries, revolution is something that no one would expect. However, some Primary Sources clearly shows evidence of the need for revolution among the commoners in France. Some factors that had caused the idea of rebellion include a king that’s completely incompetent, the bankruptcy in the country and hope of liberty after seeing the success of American Revolution. In the end it is the eager for freedom and anger towards high taxes in the third estate that finally led France into the great revolution. In Arthur Young’s travel diaries, he stressed a few key circumstances that led to the outbreak of French Revolution. In his opinion, the French Revolution was not so much a surprise and the seeds of revolution had been spread and deeply ingrained in the French long ago. First, he pointed out the long unsolved financial problem that had been bothering the nation. However, the king in throne does not have the knowledge to solve such crisis nor do the court that immersed themselves in pleasure. On top of the financial crisis, the commoners wanted for some immediate change but do not know what to look up to and hope for. I think what Young is trying telling us is that the root to the revolution is the mass bankruptcy in the country. The king could have solved this primary crisis but unfortunately he was too stupid to do that and on the other hand the court was too busy enjoying life so the crisis remain unsolved and grew into the worst situation. However, on the other hand Young questions...
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...to Avoid Bankruptcy Bankruptcy and debt problems can happen to almost anyone. These problems can arise from a variety of different causes, such as sudden job loss or natural disaster. Most people believe that the only solution for this problem is bankruptcy, but a viable alternative does exist. More and more people today are looking to consumer proposal to get rid of their bankruptcy and debt problems. Depending on your exact situation, consumer proposal might be the best solution to fix your financial problems. In Edmonton, consumer proposal is legally compulsory. It is essentially a settlement made between you and your creditors after a negotiation. In order to start completely fresh with your finances, it is completely necessary to understand the process of consumer proposal as well as its associated risks. Any Edmonton resident who wishes to undergo consumer proposal must have around $1000-$2500, not counting their mortgage. In addition, they must have a tight yet reasonable budget that makes it very difficult to pay off the debt. The first step in the consumer proposal process is filing the proposal to a trustee. This allows you to have the proposal voted by your creditors. Once your creditors have voted, you will find out whether or not your proposal has been accepted. It is at this point when you can make payment to your trustee according to the terms of the consumer proposal. If your proposal is rejected, the trustee will often help you find a different solution...
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...uncertainty took place exactly one year ago, when a credit firm called Lehman Brothers filed for bankruptcy (Eiteman, Stonehill, Moffett, 2013). At the time many assumed that the company was simple too big to fail, not that it couldn’t file for bankruptcy, but that the government would not allow for this to occur. But many experts and analysts were wrong, as Lehman brothers did in fact fail, which some believe led to the global credit crisis (Eiteman, Stonehill, Moffett, 2013). The following is a short look at whether or not the government treated Lehman Brothers unfairly, how moral hazard could be could be caused by government interference, and whether or not Lehman Brothers should have or should have not been allowed to fail. Was Lehman Brothers treated differently than other financial institutions? During the time that Lehman Brothers come to the forefront of financial turmoil, there were many other companies that were experiencing similar problems as well. Perhaps the most notable government bailout before Lehman’s bankruptcy filing was that of Fannie Mae and Freddie Mac. The United States government bailed out both companies, which put the government into a receivership position and set a new precedent (Miga, 2013). Furthermore after Lehman Brothers filed for bankruptcy, the government offered AIG an $85 billion loan package to help the company stay afloat providing more cause for concern regarding whether or not Lehman Brothers had been singled out (Eiteman, Stonehill, Moffett...
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...Crisis Page 3 1. Subprime Mortgage Crisis 2. Liquidation * Causes Page 5 * Impact Page 6 * Requirements Page 7-12 * Macro – Environment * Decision making method * Competitive strategy * Organization’s planning * Organization’s structure * Connection between Crisis & Culture * Resistance changes manage by manager * Advice to reduce crisis * Job related stress * The relevancy of innovation in mitigating the impact of the crisis and how the managers can foster innovation * Identification and description of relevant motivation theory that the managers can usefully apply to motivate the employees during the crisis * Feedback & Advices Page 12 * Referencing Guide Page 13 dfsfjn Introduction The organization in crisis that we chose to report on is the “Lehman brothers”. On September 15, 2008, Lehman Brothers declared the largest bankruptcy in history and changed the American and global economy. The company’s investment banking and trading divisions were acquired by Barclays the next day...
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...contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.] | Contents Executive Summary – Page 3 Introduction – Page 4 – 5 Critical Literature Review – Page 6 – 7 Methodology – Page 8 – 9 Data Analysis – Page 10 – 11 Conclusion – Page 11 Bibliography – Page 12 Appendices – Page 13 - 13 Executive Summary The aim of this report is to discover whether General Motors have improved since their bankruptcy in June 2009 and how? With the aid of primary research appearing in the form of questionnaires and secondary research deriving from articles and other various published documents which discuss the topic of General Motors and their bankruptcy. The result of the research finds us with the findings that General Motors have not only upheld their infamous reputation which they once possessed but they also have increased it by recording their highest profits in their history three years after filing for bankruptcy. Overall this led to the conclusion that it was the transformation of management which assisted General Motors on their route back to the glory days of the company – ‘As late as the 1990s, it was the leading company in the US light vehicle market’ (Maction, 2013) Introduction General Motors, commonly known as GM is an American based multinational automotive corporation within the city of Detroit, Michigan. Now for a company to be described as the leading company in the US light vehicle...
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...became known as Hostess Brands. Hostess Brands filed for Chapter 11 bankruptcy in November 2012. They had to close all the Hostess Brands factories and ending 18,500 jobs. In the fiscal year 2012, Hostess had a net loss of $1.1 billion with a revenue of $2.5 billion. Hostess spent eight years in bankruptcy. Many will like to know what the cause of the company bankruptcy was. (Ghillyer, 2014). Hostess Brands products and equipment would be sold through what is known as a “363 sale” because it was still in a formal liquidation. A 363 sale means everything will be sold without any liabilities...
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...Background: On September 15, 2008, Lehman Brothers Holding, Inc. filed a petition in the US Bankruptcy Court for the Southern District of New York seeking relief under Chapter 11 of the US Bankruptcy Code. With total debt close to $800 billion, Lehman was the largest US bankruptcy in the history. Lehman’s share lost over 90% of its value on the announcement date and the Dow Jones Industrial index closed over 500 points down from the previous day, one of the single largest one-day point drops since September 11, 2001. Immediately in the aftermath of Lehman’s bankruptcy, over a hundred firms disclosed their financial exposure to Lehman. Lehman’s collapse, soon became the international economic crisis which affects the different aspects of the regional economic worldwide. The seeds of the crisis can be traced to the low interest rate policies adopted by the Federal Reserve and other central banks after the collapse of the technology stock bubble. In addition, the appetite of Asian central banks for (debt) securities contributed to lax credit. These factors helped fuel a dramatic increase in house prices in the United States and several other countries such as Spain and Ireland. In 2006, this bubble reached its peak in the United States and house prices here and elsewhere started to fall. The fall in house prices led to a fall in the prices of securitized subprime mortgage, affecting financial markets worldwide. In August 2007 the interbank markets, particularly for terms longer...
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...After several years of misfortune, General Motors (GM) was encouraged to file for bankruptcy. GM had really hit rock bottom. Several of their facilities closed and thousands of jobs were cut. The cause for the bankruptcy was due to years of losses, market shares decreasing, and a breathtaking drop in sales. The bankruptcy forced GM to make some major changes within the organization, (Isidore, 2009). Knowledge Management System A knowledge management system has the ability to enhance several companies, especially GM. GM is a well-known company that has been around for several years. GM can profit from several advantages by using a knowledge management system. Some of those advantages include decreasing cost by eliminating the number of times the company must continuously resolve similar issues, decrease repetition of knowledge-based activities, raise up productivity by making knowledge accessible and user friendly, encourage employee personal growth, and establish aggressive favor in the marketplace, (Delen, Sharda, Turban, 2011, pgs. 509-510). Valuation In 2000, GM was on top of the world and put together a live Knowledge Management (KM) program. Initially, GM had the best of both worlds by having 138 best practice teams and 33 centers of knowledge working collectively with recognizable subject matter experts. The KM program was an outstanding asset for GM. The KM generated over 5000 best practices that affected quality and led to millions in cost avoidance. The KM program...
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...filed a motion to contest it. Houston judge Mike Wood affirmed the jury findings in the probate case by ruling that Smith was entitled to nothing. The judge ordered Smith to pay over $1 million in fees and expenses to a legal team. There was conflict between the Texas probate court and California bankruptcy court judgments awarded Ms. Smith $449,754,134. While the estate was pending in state probate court Ms. Smith filed for bankruptcy in Federal court, during this process federal court was called upon to decide if J Howards son played any part in interference with Ms. Smith inheritance rights the federal court decided it had the right to hear the case a federal judge vacated the California bankruptcy court's ruling...
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...Bankruptcy Fraud By Robyn Carter Forensic Accounting Data Analysis Bill Makkkawi October 13, 2009 Bankruptcy Fraud What is Bankruptcy? Bankruptcy is a way for individuals or businesses to satisfy debts. There are four types of bankruptcy. There is Chapter 7 which is a complete liquidation for individuals. Chapter 7 bankruptcy liquidates assets that are not exempt and uses the proceeds to pay creditors. In this bankruptcy creditors may be paid in full or a percentage based on the assets that were available. There is Chapter 11 which is for a business. Chapter 11 allows a business to reorganize its operation and finances so that it can pay its creditors. Sometimes in Chapter 11 another entity may take over the original entity in the reorganization. Creditors are told to give the entity time to reorganize and pay the debts. Then, there is Chapter 13 which is reorganization for individuals. Chapter 13 gives individuals a chance to pay creditors over 3 to 5 years through a Bankruptcy Trustee. Most assets can be kept depending on what percentage of the debts will be paid. If the debtor is paying the creditors in full then they would be able to keep all of their assets. This is only available for debtors with verifiable disposable income. The last type is Chapter 12 which is for farmers and fishermen (LII / Legal Information Institute). After completion of whichever chapter used, the creditor gets a “fresh start”. White Collar...
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...Causes & Cures In this essay I plan to analyze a dangerous disease that is infecting people through the U.S. This disease is called affluenza it is very contagious and once infected with the disease it is difficult to unseat. Affluenza us characterized as an unhealthy relationship with money, swollen expectations and trying to keep up with the Joneses. Affluenza creates stress, bankruptcies, and causes problems in relationships. Although, there are some people who have a different definition for affluenza. Many people find affluenza to be a rich man's disease and have responded by suggesting that the world has bigger problems without have to feel sorry for the rich. I would contend that affluenza that affluenza can be cured and maybe prevented. In analyzing affluenza I hope to shed insight those possibilities. There is a disease that is sweeping the U.S. at an alarming pace. It is called affluenza it is very contagious and growing at frightening rates. In 1997, an amazing 1.1 million debt plagued spenders filed for personal bankruptcy that was a 28.6% increase from '96. Economists predict another 1.6 million to file by the end of this fiscal year, (Shop 'til We Drop [STWD], 1997). These are two vivid examples of the amazing rate at which affluenza is growing. These numbers are occurring Causes & Cures despite the strong economy and perhaps because of it. With the economy in the U.S. going so well credit card companies are issuing more...
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...Economic Analysis. Materialien des Wissenschafts schwerpunktes: Globalisierung der Weltwirtschaft, Bd. 28, September 2003. Bremen This article discusses the failure of Swissair by analyzing the financials of the company prior to the year 2001 when the company became grounded. It begins by giving the company’s profile and its history from establishment in 1931. The paper highlights the company’s successes and gives a table that shows the gradual increase in the number of fleet, employees, revenue, cities served, and the break-even load factor from 1931 to 2000. The paper goes ahead to explain the reasons why the company failed to consider the alliance strategy that was commonly used by similar companies as well as elaborating other principal causes of failure such as government interference and uncritical media coverage, A five year financial review of the company is provided beginning 1996 to the year 2000 showing how the operating revenue increased while the EBIT and profits decreased and finally led to losses. Mileski, J., & Nwabueze, U. (2008). The Challenge of effective governance: a case study of Swissair. Journal of Corporate Governance, 8, 5, 583-594 This article begins by giving a brief history of Swissair Company making note of its initial successes and good management practices. It then explores the best managerial practices that are crucial for the success of any business, laying emphasis on the precepts of effective corporate governance and their impact on businesses...
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...Groupe Eurotunnel S.A.’s (GESA) roots go back to the Channel Tunnel Treaty that was signed between the UK and France in Feb 12, 1986. The plan is to connect Folkstone, England to Coquelles, France with 50 km rail-only tunnels running under the British Channels. Winning design is submitted by Channel Tunnel-Frace Manche Group, a group of UK & French banks and construction companies which later renames itself to Eurotunnel. Eurotunnel becomes a stand-alone entity with its own board of directors and senior management team. Initial projection for the cost of the project is £4.9 billion and the initial estimated completion date is 1993. Also, Eurotunnel is granted a 55 year concession to construct and operate the tunnel. As first order of business, in 1987, Eurotunnel set out to sign a usage contract called Railway Usage Contract (RUC) with the UK, French and Belgian national rail companies. This contract allows the rail companies to utilize 50% of Channel Tunnel capacity in exchange for annual cash payments to Eurotunnel that comprised of a fixed annual fee, a variable fee calculated using toll formula, a contribution to Eurotunnel’s operating costs and a minimum usage charge. Then the company starts raising capital through debt and equity offerings. Eurotunnel got listed in both Paris and London Stock Exchanges and offers discounted (and per my research, free in some cases) travel to shareholders. Construction of the tunnel begins in November of 1987 and it is completed in...
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