There is much confusion over the Arbonne Restucturing through Chapter 11 Bankruptcy. The following outlines the types of bankruptcies and how the Chapter 11 Bankruptcy Arbonne has chosen to utilize works.
Most people are not aware that there are seven types of bankruptcy. Only attornies and those who have experienced bankruptcy would know this.
The seven types of bankruyptcy are:
- Chapter 7: For individuals & businesses. A liquidation of assests.
- Chapter 9: For municipalities.
- Chapter 11: For individuals & businesses. A restructuring of debt.
- Chapter 12 (a&b): For family farmers and fisherman.
- Chapter 13 (a&b): For individuals with regular income.
What is bankruptcy:
Bankruptcy allows a debtor who is unable to pay creditors to divide up assets among creditors.
The purpose of the bankruptcy process is to make sure all creditors are treated equally and that creditors cease all collection efforts.
Some bankruptcy procedures allow a debtor to remain in business. The increased cash flow from the restructuring allows the business to pay creditors.
When people think of bankruptcy it is usually Chapter 7 that they have in mind. In Chapter 7 all an individual's or a business' assets are liquidated and the funds are distributed to the creditors.
For example say a company had $25,000 in assets but owed $100,000 to creditors and was unable to make payment on this debt. Through Chapter 7 Bankruptcy the company's assets are sold off for $25,000. The creditors would then receive 25 cents on the dollar.
Arbonne Bankruptcy & Chapter 11 Restructuring:
Arbonne is NOT in Chapter 7 Bankruptcy. They are using Chapter 11. Chapter 11 is a restructuring of debt where the debtor, in this case Arbonne, proposes a repayment plan or compensation plan to the creditors prior to filing Chapter 11 in court.
In Arbonne's case the creditors have agreed to exchange debt Arbonne owes them for a percentage of ownership in Arbonne.
Because the court filings began last week this means the creditors have already agreed to the prepackaged plan.
Now that court filing occurred it takes approximately 45 days for the process to be finalized.
For more and current information see my post on Arbonne Chapter 11 Bankruptcy & Restructuring Links.
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