Chapter 11 Bankruptcy Law

Words: 857
Pages: 4
Open Document
Many people in today’s economy are struggling to pay their debts. In the old days, debtors were punished and sometimes even sent to prison for failing to pay what they owed. Today, the law provides debtors with numerous rights.
The Bankruptcy Code is contained in Title 11 of the United States Code and has eight chapters. The most common types of relief debtors seek are, Chapter 7 provides for liquidation proceedings; Chapter 11 governs reorganization; and Chapter 13 provide for the adjustment of debts by persons with regular income.
Bankruptcy law in the United States has two main goals, one is to protect a debtor by giving him or her a fresh start without creditors’ claims and the second is to ensure equitable treatment of creditors who …show more content…
According to CNN Money, Pacific Gas & Electric Co., filed for Chapter 11 bankruptcy protection on April 2001, in Northern California despite months of efforts by state officials to bail out the cash-starved company. The company’s value at bankruptcy was$36.15 billion. PG&E’s bankruptcy filing is the third-largest in U.S. history but does not affect the utility's parent company, PG&E Corp., or any other PG&E division.
According to Business Insider, PG&E, fell victim to the state's electricity crisis of 2000-2001. Blackouts swept the state and costs soared through the roof, because of California's deregulation of the energy industry in 1996. Enron did not help the situation either by manipulating prices by cutting off power.
Before filing for bankruptcy executives from Pacific Gas and Electric met with the California Governor's negotiators to work out a resolution. The California Governor finally proposed a plan that increased rates which, he felt would help pay off the utilities' debts. But in the end, none of it was enough to save Pacific Gas and Electric from filing for …show more content…
PG&E’s chairman expressed that the regulatory and political processes failed them, so PG&E had no choice but to turn to the courts for assistance.
The PG&E case is a great example of a corporations using their rights to file for Chapter 11 bankruptcy. In a reorganization, the creditors and the debtor formulate a plan under which the debtor pays a portion of the debts and is discharged of the remainder. The debtor is allowed to continue carrying out business.
According to The New York Times, PG&E’s filing, seeks reorganization under Chapter 11 of the bankruptcy code, shifts decision-making about crucial aspects of the California energy debacle from officials in Sacramento, the state capital, to a federal bankruptcy court in San Francisco, where Pacific Gas and Electric has its headquarters. PG&E expects no disruptions in service to its 13 million customers nor do they expect to lay off any of its 20,000 employees. This is a prime example of PG&E continuing to carry out its business like normal. But according to SFGate, the move could lead to substantially higher rates for consumers if a bankruptcy judge places PG&E's $9 billion in debt obligations on
Show More

Related Documents: Chapter 11 Bankruptcy Law

Chapter 13 Bankruptcy

The second type of bankruptcy we are going to discuss is Chapter 13. Chapter 13 Bankruptcy is called “Individual Debt Adjustment” under the U.S Bankruptcy Code. From its name, Chapter 13 bankruptcy is mainly formed for individuals to reorganize their assets to pay back their debts. Like filing for Chapter 7, to file for a Chapter 13, the debtor must also file a petition with the bankruptcy court and provide all the necessary paperwork with a list of creditors and the debts that need to be paid. Then…

Words 914 - Pages 4

The Importance Of Bankruptcy In Texas

Bankruptcy Lawyer Arlington TX If you're in need of a bankruptcy lawyer Arlington TX trusts, contact Brandy Austin Law Firm. Bankruptcy is proceeding in federal court in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by the bankruptcy code under federal law. Filing bankruptcy stops all of your creditors from seeking to collect debts from you immediately and at least until your debts are processed according to the law.…

Words 847 - Pages 4

Final Exam Veronika Z Essay

Table of Contents Marvel 1 Why did Marvel file for Chapter 11? Was it bad luck? Bad strategy? Bad execution? 1 Will the proposed plan solve the problem? 2 Will Marvel debt holders approve the plan? Will public bondholders like Carl Icahn approve the plan? 3 Assess the projections, are they credible? How much is the equity worth according to the plan? 3 Bankruptcy Questions 5 What is a pre-packed Chapter 11? What is the commercial significance of a pre-pack? 5 What is the “right of set off”…

Words 1940 - Pages 8

Bankruptcy Law In The 1800s

Bankruptcy in the United States has a long history, dating back to the era of the founding fathers. While these early laws were originally modeled on English law, modern bankruptcy legislation differs greatly from its predecessors. In the following entry, a bankruptcy lawyer from Knochel Law Office is Bullhead City, AZ offers a brief history of bankruptcy law in the U.S. Early U.S. Bankruptcy Laws The earliest U.S. bankruptcy law was the Bankruptcy Act of 1800, which was limited to traders and…

Words 398 - Pages 2

Study Guide To Accompany Canadian Business And The Law

Study Guide to accompany Canadian Business and the Law, 5th edition Chapter 27 CHAPTER 27 BANKRUPTCY AND INSOLVENCY Objectives After studying this chapter, you should have an understanding of • the legal aspects of business failure • the rights and obligations of debtors and creditors when a business fails  alternatives to bankruptcy • the stages in the bankruptcy process Learning Outcomes • • • • • • • • Recognize the options available to creditors and debtors of a financially troubled business…

Words 4011 - Pages 17

Essay Cross 9e TBB U03

indicates that a question is new, modified, or unchanged, as follows. N A question new to this edition of the Test Bank. + A question modified from the previous edition of the Test Bank. = A question included in the previous edition of the Test Bank. chapter 9—insight into ethics: Can a company that sponsors a contest change the prize from what it originally offered? 1. Arnold enters a Bunco tournament hosted by Bunco Players Association (BPA). During the event, Arnold signs an agreement that stipulates…

Words 966 - Pages 4

Loewen Group Essay

Loewen Group Inc. Case Report – Session 3 Group 6 Executive Summary This report provides a qualitative analysis of the Loewen case study, starting from the excessive debt policy used in its expansion and ending with huge debt ratios and bankruptcy. The analysis includes the effect of the company’s policy and the financial distress it caused and results of such a financial condition. Method of Analysis: For the analysis we have used the historical financial data of the company, the history…

Words 2553 - Pages 11

Extended Essay

unions, it would be kept afloat during this time, but asserted that it would be forced into bankruptcy if agreements were not reached.” (Bowner, 2011). On May 21, GM announced it had reached a deal with the UAW (United Auto workers is a labor union of all workers in the auto industry), as required by the government. However it filed for bankruptcy on June 1st, getting a successful appeal for chapter 11 which allowed it to run as a new company. What this means is that it could terminate old supplier…

Words 4786 - Pages 20

Essay Bankruptcy: Bankruptcy and Xyz Investment Bank

Bankruptcy: An Organisational Crisis It’s very difficult to give a real look to the word ‘crisis’, it stays just underneath the carpet waiting to head up; one wrong decision and it’s there! It has got many faces; one being ‘Bankruptcy’, dubiously famous for its nod on any organisation (how small or large it may be!) at any time. Well, the name itself is quite significant and pointing towards a hardcore impact, and yes, it certainly can uproot any strong base provided all its necessities are met…

Words 1595 - Pages 7

Criminal Behavior Analysis

caught. An individuals motive and attitudes change throughout the process. Motivation is learned from what is legal and illegal. “A person becomes a criminal because of an excess of definitions favorable to violation of the law over definitions unfavorable to violation of the law” (Association of Certified Fraud Examiners, Inc., 2014 p. 4.123-4.4124). Differential association varies in intensity and duration because the frequency of contact promotes feelings, such as boredom.…

Words 754 - Pages 4