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| Authored by: Anonymous on Wednesday, September 26 2012 @ 03:30 PM EDT |
<I>Surely insolvency is recognised in the US as a condition where the
business can not continue and must be liquidated at once? If not, I fear that
there is something very wrong with US law.</i>
The purpose of chapter 11 is to allow a company that is technically insolvent to
continue operating by cancelling debts and reorganizing under a new business
plan.
SCO's case was, IMO, pure abuse of the chapter 11 code. They had no business to
continue operating, and never filed a workable plan.
The reason they were allowed to keep going was that the creditors gave up after
Cahn took the helm; and they realized he was going to continue the abuse instead
of put it to an end. There was just no money to get out of SCO anymore that
Blank Rome didn't have their grubby mits on already. [ Reply to This | Parent | # ]
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| Authored by: Wol on Wednesday, September 26 2012 @ 06:11 PM EDT |
Actually, the law saying that insolvent businesses mustn't trade is honoured
more in the breach than in compliance.
Fact: pretty much EVERY business is technically insolvent. The only ones that
aren't are those that either pay cash, or are sitting on a nice pile at the
bank.
What we tend to think of as "insolvent" technically isn't. To us it
means "capable of paying off all our debts as they fall due", ie we
will have enough money coming in to stay afloat.
But the meaning of "insolvent" as far as the law is concerned is
"could you pay off all your debts NOW if you had to". There's not many
businesses that are legally solvent... (and solvent businesses, obviously, have
no need to borrow! Still, we all know the law is an ass :-)
Cheers,
Wol[ Reply to This | Parent | # ]
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| Authored by: Steve Martin on Friday, September 28 2012 @ 07:12 AM EDT |
Yes, but the liabilities clearly exceeded
the assets by a
very large margin, which is the condition for
insolvency.
Under normal circumstances, yes, that's a
recipe for going out
of business. But under Chapter 11, companies are allowed
to
dump debt under some circumstances, which changes that
picture
drastically.
---
"When I say something, I put my name next to it." --
Isaac Jaffe, "Sports Night" [ Reply to This | Parent | # ]
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