Filing Chapter 9
Filing Chapter 9
When you are going to be filing bankruptcy, there are several different
types from which you can choose. One of the kinds of bankruptcy is called
Chapter 9, and this is municipal bankruptcy.
This began in 1934 during the great depression. This was enacted so that
municipalities could file for bankruptcy in the same way that individuals
and businesses could. The purpose of filing for Chapter 9 bankruptcy is
that it will provide a municipality that is financial distressed with
protection from the creditors, and allow it to develop further and figure
out a way to clear its debts. In the same way that other bankruptcies work,
when a municipality has filed for Chapter 9, their assets will be
reorganized in order to pay back as much of their debt as possible. With
this type, this means that either the old debts will be extended in the
interest of the debt maturities and that the creditors will still get their
money, just at a later time. Sometimes, it also means that the interest or
principal on the debts can be reduced. Other times, it means that the debt
can be refinanced by getting a new loan that will cover all of the old
ones.
The thing that is different about Chapter 9 is that there will be nothing
in the bankruptcy filings that say that the assets of the municipality have
to be sold or liquidated in order to pay off the debts. This makes it very
easy for a municipality to file for bankruptcy and figure out a way to get
out of debt without having the legal issues regarding differences between
states and their internal affairs that should not be regulated by the
government.
A person or a business cannot file for Chapter 9. Only a municipality can,
which is defined under the code as “a political subdivision or public
agents or part of a state.” This includes cities, counties, school
districts, towns, and even public improvement districts. Also included
under this definition would be bodies that produce revenue, such as bridge
authorities, or authorities that deal with highways or gas. When filing
for Chapter 9 it is very important that you fit this definition because the
specifics of Chapter 9 are meant only to provide this surface to a
municipality, and not to just an individual or a business who is going
through bankruptcy. It is designed to keep the country running as well as
possible.
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Tags: Assets, Bankruptcies, Bankruptcy Filings, Chapter 9 Bankruptcy, Choose One, Creditors, Debts, Filing Bankruptcy, Great Depression, Home Directory, Improvement Districts, Internal Affairs, Maturities, Money, Municipalities, Municipality, Public Improvement, School Districts, Several Different Types