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    Nortel Networks filed for bankruptcy on the 14th of this month because *they had an interest payment of $107 million due the next day, approximately 4.6% of its cash reserves of approximately $2.3 billion*

    I was wondering if someone could explain why they would file for bankruptcy? From what I understand, they had cash reserves from which they could pay the debt from and still have some money left.
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    there must be other reasons why they would file for bankruptcy, mainly to protect itself from its creditors
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    they owed about $3.8bn.
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    (Original post by wicked88)
    Nortel Networks filed for bankruptcy on the 14th of this month because *they had an interest payment of $107 million due the next day, approximately 4.6% of its cash reserves of approximately $2.3 billion*

    I was wondering if someone could explain why they would file for bankruptcy? From what I understand, they had cash reserves from which they could pay the debt from and still have some money left.
    Chapter 11 isn't a permanent thing (hopefully).

    They will be going into it looking to restructure and come out of it again. That being the case, and if you think it's inevitable, it's better to go in sooner rather than later.
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    The best law ever to come out of the United States is their bankruptcy law. If you read their laws, you could see that the law was meant to help people (Chapter 7) and companies (Chapter 11) to really rise from the ashes. They also have a lot of provisions and protections that I can only wish were available here.
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    (Original post by alvin5)
    The best law ever to come out of the United States is their bankruptcy law. If you read their laws, you could see that the law was meant to help people (Chapter 7) and companies (Chapter 11) to really rise from the ashes. They also have a lot of provisions and protections that I can only wish were available here.
    you been bankrupt or something
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    Weren't they talking about introducing something akin to Chapter 11 here in the UK? And IIRC one of the things that happened under Bush was the erosion of personal bankrupcy protections.
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    (Original post by Stomm)
    Weren't they talking about introducing something akin to Chapter 11 here in the UK? And IIRC one of the things that happened under Bush was the erosion of personal bankrupcy protections.
    There has been talk of chapter 11 esque provisions. Although the update to the British bankruptcy code in 1986 in some ways facilitated a move in that direction. The main difference between the different codes is whether they are debtor or creditor focused.
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    (Original post by jjpp)
    There has been talk of chapter 11 esque provisions. Although the update to the British bankruptcy code in 1986 in some ways facilitated a move in that direction. The main difference between the different codes is whether they are debtor or creditor focused.
    UK and US codes are both debtor biased (as in they have seniority over creditors in payments due), in contrast to some countries particularly in Europe (i.e. Spain for example) which are more biased towards the creditor.

    US is different because it allows for different stages and types of bankruptcy. I.e. a company can enter chapter 11 to halt payments which could otherwise force them to default on payments, impact their ongoing operations or cause them to severly default on loan covenents, or worse, allowing them breathing space to restructure (often this is a drastic process involving substantial sales of assets etc.) and come out again a more financially healthy company which has happened a few times. It looked at one stage as if Lehman were trying this, but it was really too far gone by that stage!
 
 
 
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