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mrcolon96 t1_j5vdltf wrote

Reply to comment by Redqueenhypo in Twitter faces legal complaint in Germany over anti-Semitic content by davetowers646

I'm only assuming because I'm neither American nor well versed in law but isn't it to avoid mass layoffs and have a lot of people lose their job all of a sudden? Which would be ironic in this case but I'm talking about the law in general

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fyzbyt t1_j5vrp1c wrote

So there's 2 different major kinds of "bankruptcy" that are most commonly seen here in the US.

Chapter 11 is the one you see a lot, which is basically "our debts are too big" and what happens is that the company generally restructures the debt, but is not relieved of it, and is allowed to continue operating. The idea is "they're making money, just not fast enough" and they keep making money and having to pay the debt, but maybe in a lower payment over a longer time, or similar. This allows for all the bullshit loopholes and IMHO shouldn't really exist, but it is what it is.

Chapter 7 is what most people think of when they call something bankrupt. Which is where the creditors come in and liquidate everything. Sports Authority is a great example of this, or Toys R' Us, where they basically had to shut down every store and sell everything off and close down.

There's also the illusive "chapter 13" which is where you eliminate debt through a repayment plan. This generally results in a shorter repayment window where you have to pay back some of your debts in a structured way, and then the rest is forgiven, but it's not particularly common from what I've seen.

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the_busticated_one t1_j5we86q wrote

>There's also the illusive "chapter 13" which is where you eliminate debt through a repayment plan

Chapter 13 applies to individuals, not businesses. It's referred to as an 'individual debt adjustment"

There's also Chapter 9 that applies to municipalities, and a few other types that are fact-specific.

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fyzbyt t1_j5wnvj3 wrote

That would explain why i've never seen it.

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Masark t1_j5x3sbr wrote

Processes similar to chapter 11 exist in most countries. It's just called something else like bankruptcy protection, protection from creditors, administration, etc.

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fyzbyt t1_j5x4nwn wrote

Right, but they were asking about why the US called it that.

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