Bankruptcy and the related laws:
There are different laws related to the bankruptcy in the
different countries. Any person or the company that wishes to
declare it bankrupt has to file the application as per these
laws prevalent in a particular country pertaining to the bankruptcy.
Though different laws in different countries govern it, the
bankruptcy records is rampant in all the parts of the world.
After the bankruptcy is filed, there are various types of investigations
that are made and on the basis of these investigations and findings,
decision about the future proceedings are taken. For example,
in the United States, a person or a company etc can file the
application for the bankruptcy under either chapter 7 or chapter
13 of the U.S bankruptcy laws. One thing that is to be noted
here that all the proceedings right from the filing of the application
for the bankruptcy and closing the matter in a decided way,
are recorded in the court of law. It is done because of future
reference and also, because it is a mandatory requirements.
These records that are preserved are known as the bankruptcy
records. These are not just mere records and are of much
helping to the various persons etc. We shall discuss these all
in the next parts of our discussion.
The bankruptcy records
It is well known to each of us that when a person or a company goes for the bankruptcy, he is not able to repay the debts borrowed from various other parties and the creditors are not in any mood to defer their payments any longer. All these force a person or a company to declare itself bankrupts. This is all done so that the bankrupt person or the company does not have to face strong implications from the court and also, it gets a new chance to start or repay the money of the various creditors.
As said earlier, all the proceedings are comprehensively recorded in the court of law. It is certain that when a person goes for the bankruptcy, he creates a permanent black mark on his record. The same is the case with any company, which goes for the bankruptcy. The implications are much more in the case of a company rather than a person. This is because the company is known by many persons as compare to a person in general and the company has to start his operations again with that blemish. Thus, once a company files for the bankruptcy, the image is tarnished.
Each and every case of bankruptcy records
that is brought to any court of law is recorded with its full
proceedings. Moreover, these records are also preserved for
a longer time.
Now the question that arises here is that what the implications of these bankruptcy records are. As said earlier also, the implications of the bankruptcy records are quite severe. Let us discuss it in our next part of discussion.
Implications of bankruptcy records
The first and perhaps the most severe implication of the bankruptcy records
is that it act as a warning or a red flag to any investor, that
wishes to invest in a particular company or wishes to make advances
to person. This is because when the investor would come to know
about the bankruptcy of a person or a company, it would not
be easy for him to carry on. There are many doubts that have
to be cleared and many explanations have to be gives so as to
prove the rational behind the bankruptcy. Bankruptcy
itself is a blemish on any person or company. Since the bankruptcy
is filed when it becomes impossible for a person or a company
to repay the funds, it makes the situation worse for an investor
or any financial institution that wishes to make advances to
the bankrupt person or the company. In the present times, any
big investor always goes for the investigation of the bankruptcy
records to see whether the person or the company it is going
to finance has been declared bankrupt or not. If it has been
declared bankrupt, it is also seen, what were the future steps
that were taken and how has the company etc has come out of
that bankruptcy. There are many investors that properly understand
that a person or a company can declare itself bankrupt owing
to different reasons, especially if bankruptcy has been declared
in the start of a new business. They properly understand that
it takes two or three tries to become successful in the business
and thats why, bankruptcy records
doesnt bother them. The only thing they look for is the entrepreneurial
spirit. In the present times, almost all the investors are looking
upon this feature as they see the return in the long terms and
not the short term.
Also, the bankruptcy records invariably contain all the details about the bankruptcy. So, it also mentions the reasons for declaring the bankruptcy. The aspect for which an investor should look into the bankruptcy record of any person or company is that did best efforts were put in to avoid the bankruptcy If the answer is yes, the bankruptcy should be construed in other way by the investor. The way should be that many a times, the efforts of a person does not bear fruits because of many reasons besides the best efforts. But this never makes a person or a company inefficient. Many investors who wish to make advance to a bankrupt person or company are adopting this attitude.
The other implication of the bankruptcy records that is not at all good for
the health of a person or a company is the bad image that is
created in not only the society but in the whole country. This
is because of the reason that the bankruptcy records are made
public to all. Thus, it reaches millions of people across the
country. For example, the news of Adelphia bankruptcy and the
APX bankruptcy news reached all the people living in the whole
of the United States. Thus, the personal information about a
person or the essential information about a company is accessed
by many a people or the companies because of making the bankruptcy
records public. The bankruptcy records are made public because
of many reasons that are quite obvious. So, the person or the
company is seen with a fraudulent nature perspective. This is
really a great setback because how much effort it put in and
how much it succeeds in future, the word bankruptcy
records would always be there in the records with the court
of law. And what makes the situation worse is the fact that
these bankruptcy records can easily be seen online now.
So, implications are severe
Thus, it can be rightly said that the implications of the bankruptcy records
are really severe and it makes a deep dent in the image of the
person or the company in the public at large.
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