You gotta wonder how an actor of his stature and fame can be bankrupt? But it’s true according to TMZ.com
General Motors has finally filed for Chapter 11 bankruptcy after weeks of speculation, bidding wars etc.
The restructuring is suspected to change GM in a big way, with over 20000 US workers likely to lose their jobs as GM streamlines its operations. GM currently has 173000 employees across the US, Canada and Mexico.
US Chapter 11 bankruptcy protection gives an American company time to restructure its finances while being protected from its creditors.
US Taxpayers will end up with a 60% stake in GM, with the union, its creditors and federal and provincial governments in Canada owning the remainder of the company.
Video from WPRI.com
Firstly it’s a term widely used in the US. Wikipedia defines Chapter 11 as the following:
When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under Chapter 11. In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.
Typically there are different chapters of bankruptcy depending on how “deep in the shit your company is in”. However chapter 11 bankruptcy, the lesser of the two common bankruptcy filings, allows a company to continue business while sorting out its financial affairs. So if you are doing really badly and owe tons of cash to others, this chapter allows you to continue doing business while putting yourself into even more debt, well it’s meant to bide a business some time.
After a Chapter 11 Bankruptcy has commenced, the debtor has 120 days from the day the order for relief is granted to submit a reorganization plan to the Office of the United States Trustee. The essential element in any reorganization plan is careful planning. This reorganization plan, prepared by an accountant, is often very long and detailed.
The most important thing to be kept in mind is that filing for bankruptcy should not to be taken lightly. It reflects your credit rating for many years.
I will cover the rest of the chapters in future posts. At the moment Chapter 11 appears to be the most common form of bankruptcy and I am seeing a lot more news recently on it.
Below are some of the companies that have filed for Chapter 11 in the past 48 hours:
- Clemente Ambulance files for Chapter 11 bankruptcy protection.
- Casino cruise line based at Port Canaveral files Chapter 11.
- Sportman’s Warehouse files for Chapter 11. – Sportsman’s Warehouse earlier this month said it was closing 23 stores in 17 states, had sold off 15 others and was laying off 2000 people, including 150 in Utah.
- Chattanooga: $260 million loan deadline prompted Bi-Lo’s Chapter 11.
- Transmeridian files for Chapter 11.
- Fleetwood Enterprises, the California maker of recreational vehicles and pre-fabricated homes, filed for Chapter 11 bankruptcy. The company, hit by the steep drop in RV sales that started with last year’s sharp spike in gasoline prices and worsened with the credit crunch and deteriorating economy, said it was putting its motor-home and manufactured housing units up for sale but was closing its travel trailer division, eliminating 675 jobs.
- Injection molding machine manufacturer Milacron Inc. recently filed for voluntary Chapter 11 protection to make the sale to an investor group possible. The Chapter 11 protection is strictly limited to the US and Canadian Milacron Companies; thus, Milacron BV Netherlands, the holding company owning all European businesses is not affected.
- North American Scientific Inc., which provides products and services for cancer treatment, on Thursday said it filed for Chapter 11 bankruptcy protection, and agreed to sell its prostate brachytherapy product line for a lower price.