Published on January 11
Bankruptcy is the process by which a business that is insolvent may eliminate or modify its existing obligations. Corporate bankruptcy means any bankruptcy entered into by an entity organized as a corporation, a limited liability company, partnership, limited liability partnership or any other form of business entity. The term corporate bankruptcy is also frequently misused to refer to any bankruptcy other than an individual bankruptcy. The corporate bankruptcy process is governed by the Federal Bankruptcy Code, codified in Title 11 of the United States Code.
Corporate bankruptcies are divided into two distinct types.
Chapter 7 “liquidations”. In Chapter 7 liquidation, the business …
Added in Banking & Finance, Bankruptcy
Published on January 11
What are Golden Parachute Payments?
The phrase “golden parachute” refers to an agreement between a company and a high ranking executive which calls for the executive to receive a large predetermined amount of compensation in the event there is a “change-in-control” of the company. Although employment agreements may limit the circumstances under which the compensation is received, the rules regulating the tax treatment of golden parachute payments apply regardless of whether or not the executive’s employment is terminated.
In theory, golden parachutes allow executives to retain their objectivity during the takeover process by enabling them to evaluate the terms of the proposed …
Added in Banking & Finance
Published on January 11
Why Take a Lien
When a Creditor lends money to a Debtor, the Creditor may wish to have a lien on some property or right owned by the Debtor in case the Debtor does not voluntarily repay the money. Such property or right is called “collateral”. If the Debtor does not voluntarily repay the loan, the Creditor may sell the collateral to produce money to repay the loan.
Why Perfect a Security Interest
How does a Creditor lien collateral and know its lien is valid against all other creditors and enforceable against the Debtor? The Creditor perfects its lien. Perfection is the …
Added in Banking & Finance
Published on January 11
What is Insider Trading?
Insider trading is the trading of a corporation’s securities, such as stock, bonds, or stock options, by people who have access to non-public information about the company. Although generally thought of as criminal, certain types of insider trading are completely legal and in fact common. The Securities and Exchange Commission (“SEC”) is the government entity in charge of policing and prosecuting illegal acts of insider trading as well as creating rules to clarify what conduct is prohibited.
An “insider” is a person with access to “material” inside information – information that might affect the company’s stock price and/or …
Added in Banking & Finance, Helpful Business Info, US Laws
Published on January 7
Financing a Business
One of the most important questions that face all businesses is how to secure financing to begin, continue, or expand operations. In evaluating financing options, a business must consider a variety of factors, including: what types of financing are or will become available, the businesses current balance sheet and financing, the owner’s resources, the length of time the financing is needed for, and the impact on ownership and control of various financing options.
The simplest form of financing is known as “boot strapping.” Boot strapping is a term used to refer to an owner or group of owners financing …
Added in Banking & Finance
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