Fixed Income Investments - Bondholder's Rights
The Bankruptcy Process
Bankruptcy - this is the dirty little word that most debt holders hate to hear. It occurs when an entity can no longer make the payments to its creditors. Bankruptcy grants the entity protection from creditors. The entity can then decide whether to liquidate the company by selling everything and leaving no surviving entity or to have a reorganization. With a reorganization, a new entity will emerge after the bankruptcy. A bankruptcy can occur in two ways:
- Voluntary - the company decides to pull the plug by itself.