Liquidating loan definition

29-Sep-2017 15:47

The outcome of an insolvent restructuring can be very different depending on the laws of the state in which the insolvency proceeding is run, and in many cases different stakeholders in a company may hold the advantage in different jurisdictions.

In Australia Corporate insolvency is governed by the Corporations Act 2001 (Cth).

Increasingly, legislatures have favored alternatives to winding up companies for good.

It can be, in several jurisdictions, grounds for a civil action or even an offence, to continue to pay some creditors in preference to other creditors once a state of insolvency is reached.

Governments can be insolvent in terms of not having money to pay obligations when they are due.

If a government does not meet an obligation, it is in "default".

The principal focus of modern insolvency legislation and business debt restructuring practices no longer rests on the liquidation and elimination of insolvent entities but on the remodeling of the financial and organizational structure of debtors experiencing financial distress so as to permit the rehabilitation and continuation of their business.

In some jurisdictions, it is an offence under the insolvency laws for a corporation to continue in business while insolvent.

In others (like the United States with its Chapter 11 provisions), the business may continue under a declared protective arrangement while alternative options to achieve recovery are worked out.

However, in most cases, debt in default is refinanced by further borrowing or monetized by issuing more currency (which typically results in inflation and may result in hyperinflation).

Insolvency regimes around the world have evolved in very different ways, with laws focusing on different strategies for dealing with the insolvent.

The principal focus of modern insolvency legislation and business debt restructuring practices no longer rests on the liquidation and elimination of insolvent entities but on the remodeling of the financial and organizational structure of debtors experiencing financial distress so as to permit the rehabilitation and continuation of their business.In some jurisdictions, it is an offence under the insolvency laws for a corporation to continue in business while insolvent.In others (like the United States with its Chapter 11 provisions), the business may continue under a declared protective arrangement while alternative options to achieve recovery are worked out.However, in most cases, debt in default is refinanced by further borrowing or monetized by issuing more currency (which typically results in inflation and may result in hyperinflation).Insolvency regimes around the world have evolved in very different ways, with laws focusing on different strategies for dealing with the insolvent.Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts.