Chapter 11 and American Culture

Posted in Uncategorized by qmarks on January 25, 2011

Compared to Canada, why United States has more freedom in terms of company bankruptcy? Ramy Elitzur says USA is founded by two groups of people, one was escaping from the religious pressure, latter was escaping from England where the inability to pay-back your debt resulted as life time imprisonment. Therefore those second group of people escaping from this severe debt punishment culture created a more tolerated environment in terms of debt repayments. So companies who filled Chapter 11 protection can actually come up from a debt burden balance sheet to a level with stronger balance sheet where they can even seek take-over targets., i.e. K-Mart filed Chapter 11 in 2001 and  in 2004 they announced a purchase intention for Sears.

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