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Bankruptcy in sentence

561 examples of Bankruptcy in a sentence

Other creditors typically cannot do that; in a US bankruptcy, for example, they must first wait for a court to decide whether the debtor company can be restructured.
With the recent missive to the derivatives industry, they are now starting to deal with bankruptcy – and well they should.
Until now, bankruptcy has played a second-tier role in reform efforts, even though bankruptcy law does for industrial firms much of what regulators want for financial firms.
By restructuring a failed industrial firm’s debts, saving its profitable businesses, and selling its loss-making ones, bankruptcy can minimize a failed firm’s knock-on costs for its creditors and the economy as a whole.
But, though US bankruptcy law usually does a good job of restructuring industrial firms, it cannot restructure financial firms, because bankruptcy’s basic rules – which allow the court to consolidate the firm’s assets, redeploy them, and sell the rest – do not apply to most financial contracts, like derivatives.
So, bankruptcy is both part of the problem and part of the hoped-for solution – if it can be fixed and made to work for financial firms.
When then-US Secretary of the Treasury Henry Paulson decided not to bail out Lehman, the firm filed for bankruptcy and quickly sold off its brokerage operations.
By most accounts, Lehman’s derivatives portfolio was a winner when it went bankrupt, but bankruptcy exemptions for derivatives allowed Lehman’s counterparties to close out their positions rapidly, in ways that were costly for Lehman, chaotic for financial markets, and damaging to the real economy.
The derivatives market is exempt from rules that stop creditors from grabbing collateral and terminating their contracts when the debtor files for bankruptcy.
They are also exempt from rules that impede better-informed creditors from seizing assets and running off just before a bankruptcy, even if their positions are needed, say, to sell a portfolio intact to another business, and even if the fleeing creditor would eventually be paid in full, with interest.
But the US Congress and regulators have said all along that bankruptcy is the preferred way to restructure failed financial firms.
If a judicial bankruptcy process could work, the thinking goes, it would minimize the likelihood of taxpayer-financed bailouts and disruption of financial markets and the real economy.
The problem is that bankruptcy today is no more capable of restructuring a failed financial firm than it was in 2009; a failed Lehman in 2014 would be no less disruptive to the world economy.
US regulators, for example, cannot first try bankruptcy before deploying their expanded powers under the 2010 Dodd-Frank financial-reform legislation; if they did, the bankrupt firm’s counterparties in the derivatives and repo markets would close out their contracts and dump their collateral as soon as they could.
Once that happened – probably within hours of the bankruptcy filing – the firm would be beyond repair.
So, as it stands now, regulators need to preempt bankruptcy, not rely on it, because as soon as any failed financial firm files for bankruptcy, it has signed its own death warrant.
But, as regulators reflect further, they will recognize that they cannot rely on the derivatives industry to revise its contracts any more than industrial bankruptcy relies on creditors’ contracts to stop failed firms from being ripped apart.
Regulators may well need to turn to bankruptcy laws to fix the problem.
For example, when the major government contractor Carillion recently filed for bankruptcy, it revealed that it has a £590 million ($826 million) pension deficit, despite having paid out generous dividends in recent years.
In reality, the coup leaders’ main concern was to avoid admitting what they had been doing since 2010: extending a generalized bankruptcy into the future by forcing Greece to accept new, European taxpayer-funded loans, conditional on ever-greater austerity that could only shrink Greek national income further.
Bank runs occur when people, worried that their deposits will not be honored, hastily withdraw their money, thereby creating the very bankruptcy that they feared.
Mexico declared bankruptcy in 1982; and Brazil, Argentina, and Chile followed soon after.
Policymakers will have to worry about a strange beast called “stag-deflation” (a combination of economic stagnation/recession and deflation); about liquidity traps (when official interest rates become so close to zero that traditional monetary policy loses effectiveness); and about debt deflation (the rise in the real value of nominal debts, increasing the risk of bankruptcy for distressed households, firms, financial institutions, and governments).
It is a signal of its moral bankruptcy.
If the real (inflation-adjusted) value of nominal debts increases, more debtors could fall into bankruptcy.
With the bankruptcy of Lehman Brothers in September, 2008 the inconceivable happened: the financial system went into cardiac arrest.ampnbsp;
Farewell to the Neo-Classical RevolutionLONDON – The looming bankruptcy of Lehman Brothers, and the forced sale of Merrill Lynch, two of the greatest names in finance, mark the end of an era.
US bankruptcy rates are already up 33% over four years ago.
The latest example of this practice now in the news is that of General Motors, which hired Anton Valukas, a prominent former prosecutor who examined and reported on the dealings of the failed investment bank Lehman Brothers to the bankruptcy court.
Any settlement should also include the banks’ explicit agreement that they will support modifying America’s bankruptcy law to enable inclusion of mortgages in the usual court-run processes.
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