What is the difference between bankruptcy protection and bankruptcy

There are two types of bankruptcy proceedings in the United States, one is bankruptcy and the other is bankruptcy protection.

Bankruptcy refers to the cessation of all operations and production of the enterprise, bankruptcy liquidation, repayment of creditor debts, and the cessation of transactions of the enterprise's creditor's rights and become worthless;

Bankruptcy protection, in essence, is equivalent to asset reorganization, the normal operation of the production and operation of the enterprise, the normal transaction of creditor's rights, and the creditor is not allowed to force the enterprise to repay the debt.

Bankruptcy in China, generally referred to as the first type, is almost always malignant.

The U.S. Bankruptcy Code governs how a company ceases to operate or how it gets out of debt. When a company is nearing the end of its rope, it can invoke Chapter 11 of the Bankruptcy Code to "reorganize" its business and strive to make another profit. The bankrupt company, also known as the "debtor", can continue to operate as usual, the company's management continues to be responsible for the day-to-day business of the company, and its ** and its bonds continue to trade in the market, but all major business decisions of the company must be approved by a bankruptcy court, and the company must also file a report with the ** exchange commission.

If a bankruptcy petition is filed under Chapter VII of the Bankruptcy Code, the entire business of the company must cease immediately and completely. The trustee of the estate "liquidates" (auctions) the company's assets, and the proceeds are used to pay off the company's debts, including to creditors and investors.

Generally speaking, if a company applies for bankruptcy under Chapter VII of the Bankruptcy Law, the ** in the hands of shareholders usually becomes a piece of waste paper, because if the bankruptcy court confirms that the debtor is insolvent (liabilities are greater than assets), the shareholders' investment can not be returned. In addition, there is often very little left of a company's assets after liquidation has been given priority to secured and unsecured creditors.

Most public companies will file for bankruptcy protection under Chapter 11 of the Bankruptcy Code, rather than going into direct liquidation under Chapter 7, because they still want to continue to operate and control the bankruptcy process. Chapter 11 sets out some procedures for reviving corporate business, and indeed some corporate restructuring plans have been successful and profitable again. But some companies end up in liquidation.

Bankruptcy includes bankruptcy and bankruptcy reorganization, and bankruptcy is broader than bankruptcy. Bankruptcy refers to a legal system in which the creditor or debtor applies to the court to declare bankruptcy and repay the debts in accordance with the bankruptcy procedure when the debtor is unable to repay its debts or is insolvent.

Bankruptcy refers to a legal system in which the debtor is unable to pay off the debts due with all his assets, and fails to reach an agreement with the creditor to reduce or delay the repayment of the debt.

Bankruptcy law refers to the general term of legal norms that regulate the legal relations between bankruptcy creditors and debtors, courts, administrators and other participants in the bankruptcy process.

China's Enterprise Bankruptcy Law applies to all enterprise legal persons, including state-owned enterprises, collective enterprises, private enterprises, etc.; However, it does not apply to enterprises, individual industrial and commercial households, partnership organizations, rural contracted business households, and natural persons without legal person status.

Bankruptcy protection means that regardless of whether the debtor is solvent or not, the debtor must submit a bankruptcy reorganization plan when the debtor voluntarily settles off the lease and submits a bankruptcy reorganization application to the court or the creditor compulsorily submits a bankruptcy reorganization application to the court. The differences between bankruptcy protection and bankruptcy are: 1. The purpose of establishment is different; 2. Different value functions; 3. The specific measures taken are different; 4. The actual benefits obtained by creditors are different.

Legal basis: Article 8 of the Enterprise Bankruptcy Law of the People's Republic of China Article 8 The bankruptcy application and relevant evidence shall be submitted to the people's court. The bankruptcy application shall contain the following matters:

1) The basic information of the applicant and the respondent; (2) What is the purpose of the application; (3) the facts and reasons for the application; (4) Other matters that the people's court finds should be clearly stated. If the debtor submits an application, it shall also submit to the people's court an explanation of its property status, a list of debts, a list of creditor's rights, relevant financial and accounting reports, a plan for the resettlement of employees, and the payment of employees' wages and social insurance premiums.

Legal analysis: Bankruptcy protection means that regardless of whether the debtor is solvent or not, when the debtor voluntarily submits a bankruptcy reorganization application to the court or the creditor compulsorily submits a bankruptcy reorganization application to the court, the debtor must submit a bankruptcy reorganization plan. The differences between bankruptcy protection and bankruptcy are:

1. The purpose of establishment is different; 2. Different value functions; 3. The specific measures taken are different; 4. The actual benefits obtained by creditors are different.

Legal basis: Article 8 of the Enterprise Bankruptcy Law of the People's Republic of China Article 8 The bankruptcy application and relevant evidence shall be submitted to the people's court.

The bankruptcy application shall contain the following matters:

1) The basic information of the applicant and the respondent;

2) the purpose of the application;

(3) the facts and reasons for the application;

4) Other matters that the people's court deems should be included.

If the debtor submits an application, it shall also submit to the people's court a description of the property status, a list of debts, a list of creditor's rights, relevant financial and accounting reports, a plan for the resettlement of employees, and the payment of employees' wages and social insurance premiums.

Bankruptcy and bankruptcy protection are two completely different concepts in law, and the main difference is whether or not it can continue to operate.

Bankruptcy refers to the state in which the company is unable to pay off its due debts and is unable to continue its business, and the court declares that it will cease its business and liquidate its claims and debts. The entire business of the company declared bankrupt must be immediately and completely stopped, and the trustee of the bankruptcy estate will "clean up" (auction) the company's assets, and the proceeds will be used to repay the company's debts and enter the bankruptcy liquidation procedure.

Bankruptcy protection means that regardless of whether the debtor is solvent or not, when the debtor voluntarily submits a bankruptcy reorganization application to the court or the creditor compulsorily submits a bankruptcy reorganization application to the court, the debtor proposes a bankruptcy reorganization plan to make arrangements for the duration and manner of debt repayment and the possible derogation of the interests of certain creditors and shareholders. This plan should be given a certain amount of time to be proposed, and then after the creditors approve it and the court confirms it, the debtor can continue to operate.

The differences between bankruptcy protection and bankruptcy are:

First, the purpose of the establishment is different. The former is about saving the enterprise, and the latter is about making the enterprise disappear.

Second, the value function is different, the former actively prevents the debtor from bankruptcy and embodies the function of increasing the value of the bankrupt enterprise's property, while the latter reflects the function of redistributing the bankruptcy estate and passively and fairly distributing the debtor's property.

Thirdly, the specific measures taken are different.

Fourth, the actual benefits received by creditors are different.