Bankruptcy Indiana

As a certified consumer bankruptcy specialist, I've always worked with individuals, families, and small business owners, helping them navigate the bankruptcy legal process.  I don't deal with big business, as a rule.  In my bankruptcy blogs, though, I can use big business bankruptcies as a sort of teaching tool to clarify how bankruptcy law works and what the thinking is behind the different steps in the bankruptcy legal process.
 
Recent headlines about bankruptcy seem to be mostly about the Big Three auto makers, particularly GM and Chrysler.  Last summer and fall, talk was that a bankruptcy filing by a major auto company would mean the end of the car manufacturing industry in our country. Today, the tone seems to have changed, with both Chrysler and GM on deadline to turn their debt situation around or face bankruptcy.

General Motors Corporation's new CEO, Fritz Henderson, is saying the company would "prefer to restructure out of court," but adds they might also restructure under a court-ordered bankruptcy if necessary.  Meanwhile, the federal administration offered to help in three ways:

a.  Stand behind GM and Chrysler vehicle warranties

b.  Allow 2009 car buyers to take a tax deduction for the sales and excise 
     tax they pay in purchasing a vehicle
 
c.  Infusing short-term money (30 days' worth to Chrysler to complete a 
     partnership with another automaker and 60 days' worth if financing 
     to GM)

Meanwhile, to reassure consumers and boost auto sales, GM itself has instituted a new "Total Confidence" program, saying the company will make up to nine car payments of $500 or less for customers who buy cars, then lose their job through no fault of their own. (Ford, by the way, has already promised to take over customers' payments of up to $700 a month for an entire year, and I wrote in a former blog post about Hyundai's take-back plan.)

By way of review, if any of the auto companies ends up filing bankruptcy, it would most likely be a Chapter 11 (individuals and small business owners with whom I deal file Chapter 7 or Chapter 13).  If GM, for example, were to file bankruptcy, one of the purposes would be to lock in concessions from the unions, while getting creditors to accept write-downs on the debts owed to them.  The idea, as with all bankruptcy, is to offer a chance for the company to reorganize and achieve long-term viability.

Bigger canvas, but, really, the same picture.  Bankruptcy is a safety net for when individuals or companies need a chance to make a fresh financial start.