Download App

Home

News

Pods

🚀

Startup Showcase

Notifications

Join our whatsapp channel for quick updates

Switch theme

Blog . Feedback . Privacy

Post on Medial

Anonymous

Stealth • 2m

When you hear that a company went bankrupt, many of you will think is that the company sold all their assets, paid their creditors what they had and just stopped the running the company. But that's Chapter 7 bankruptcy or liquidation and that's not what takes place most of the time. When you hear a company went bankrupt, the company most probably filed for Chapter 11 bankruptcy or restructuring. In simple words, basically all the creditors of the company get a stake in the company and the company keeps running as usual. So for example a company with $500 Million in liability files for Chapter 11 Bankruptcy. Thus in this case, 1) The value of company's asset will be estimated. Every creditor and owner will come with a different figure and one of those will be finalised. Lets say $200M in our case. 2) Now creditors will be alloted stake in the company based on their seniority. This list goes something like Secured Creditors, then Unsecured Creditors, followed by Prefered Stock Holder and finally Common Shareholder. Now the stake is allotted based on who's first in the list. Common shareholders mostly get nothing to negligible stake during this. 3) The restructuring is now complete. The creditors are now the new owners of the company and now they can change the operations, hire or fire management based on their choice. So a company may get bankrupt multiple times and will still be running. This bankruptcy is widely used so the company can remain in the buisny and yeild income in the future (thats never happens tho)

1 replies5 likes

Replies (1)

Anonymous 1

Stealth • 2m

But if ultimately the promoters and investors don't make their money back, let alone profits then it is same as going bust right? Whatever you like to call it to save face, the company is broke and remains dead right? I don't know of any examples who went bankrupt and then came back to life on their own. And no, CCD doesn't count, it is just a time bomb.

1 replies

Recommendations from Medial

Uttkarsh Singh

Stealth • 20d

So Google is now bankrupt in Russia 😂

4 replies12 likes

Jaswanth Jegan

Stealth • 5m

"The Hero Who saved a Airline Twice" Bankruptcy to Billions #6 Ajay Singh returns to save SpiceJet Ajay Singh Bought ModiLuft(bankrupt Airline) and renamed as Spicejet with three leased aircraft, and Rs 10 crore of investment.SpiceJet took off on 2

10 replies8 likes

Yash Barnwal

Stealth • 1m

From EdTech giant to bankruptcy proceedings – the rise and fall of BYJU'S. Once valued at $22 billion, the company now faces insolvency after a series of acquisitions, debt defaults, and investigations.

0 replies3 likes

Jeet Sarkar

Stealth • 9m

Indian technology company Wipro will acquire insurtech firm Aggne Global Inc. and its Hyderabad-based affiliate Aggne Global IT Services for $66 million or around Rs 548 crore. Initially. The company will acquire a 60% stake in an all-cash deal, wit

0 replies3 likes

LIKHITH

Stealth • 2m

STAY UPDATED ! Last month, reports came out indicating that OpenAI was on the verge of bankruptcy within a year, with projected losses of $5 billion. OpenAI will reportedly be bailed out of bankruptcy by Microsoft, Apple, and NVIDIA, and the compa

10 replies9 likes

LIKHITH

Stealth • 2m

DID YOU KNOW ! Nvidia, the world's second-largest company by market capitalization, considered declaring bankruptcy in the early 1990s. Their initial chip, the NV1, was a commercial failure.

6 replies6 likes

Mahendra Lochhab

Stealth • 5m

One97 Communications Limited, the parent company of Paytm, has denied being in any discussions with the Adani Group regarding a potential stake sale.

0 replies9 likes

Mayank Kumar

Stealth • 4m

Just days after the liquor podcast nikhil has just acquired a 1.7% stake in Radico Khaitan for a massive ₹400 crores!!! I am now convinced its their multiverse and we are living in it! Will the middle class ever get a break?

8 replies10 likes

financialnews

Stealth • 23d

Tata Power acquires 40% stake in Khorlochhu Hydro Power for Rs 830 cr . . . On August 6, the Board of Directors of The Tata Power Company Limited approved a proposal for the acquisition of a 40 per cent equity stake in Khorlochhu Hydro Power Limited

0 replies4 likes

Prakhar Sinha

Stealth • 7m

Want a electronics enthusiast who has worked with bare metal MCUs and not just arduino/rpi stuff. Interested in building a business/running a company will be an upper edge.

6 replies6 likes