Retirement accounts not protected by bankruptcy exemption

In a surprising decision, the U.S. Supreme Court has decided that inherited individual retirement accounts are not to be protected by bankruptcy under federal law. That will have plenty of consequences, since it used to be a bankruptcy exemption that couldn’t be claimed by creditors. Individual retirement accounts used are protected, because in 2005, President Bush signed a law called the Bankruptcy Abuse Prevention and Consumer Protection Act that provided retirement funds protection during bankruptcy. The problem has come about with inherited IRAs, though. Because people aren’t using those inherited IRAs as retirement funds, they are seen as a different kind of fund and are not protected under the bankruptcy protections previously offered. That is an issue that needs to be considered by those with IRAs and those who may be looking to inherit money. This new ruling has come as a result of a 2010 case that took place when a woman filed for Chapter 7 bankruptcy. She listed the IRA as an exempt asset, but there was a problem. Some people argued that the $300,000 asset should be used to satisfy her creditors. The woman appealed a ruling by the Wisconsin bankruptcy court that the IRA wasn’t protected,… Continue reading

Genco Shipping makes its way through business bankruptcy

Nobody starts a business with the idea that it will one day face financial difficulties. However, this is a very real problem for many organizations. For some, closing up shop is the only answer. Others, however, consider additional strategies, such as Chapter 11 bankruptcy, in hopes of finding their way back on the right track. Genco Shipping, headquartered in New York, has recently emerged from Chapter 11 and is now on the path to a better future. According to the company, the business bankruptcy worked out in the long run, saying that it helped reduce debt by more than $1 billion, while eliminating annual interest payments of $40 million and amortization payments of $192.8 million. This process did not take too long, with Genco Shipping first filing for Chapter 11 protection in April. It was then that the company noted its large amount of debt and desire to reduce it while restructuring at the same time. On top of reducing and eliminating debt, the bankruptcy filing allowed the company to receive $100 million in new money via a rights offering. After the company ran into hard times, when revenue decreased by approximately 50 percent, business bankruptcy appeared to be the… Continue reading

Oh Crumbs': Crumbs’ heads toward bankruptcy in New York

A July 9 report has been released discussing the sudden shut down of the Crumbs Bake Shop and all its locations. This is a shocking move, since bankruptcy, either Chapter 11 or Chapter 7, would be more beneficial if the company wanted to stay open or settle with creditors. The sudden move by the company has left a number of people questioning just what happened, and others want to know what kind of bankruptcy the company with have to go with. Chapter 7 seems to be the answer, although Chapter 11 bankruptcy would allow the company to have greater control over its assets and liabilities. The company would receive time to cancel or continue leases and sort out payment plans for rental properties. If the company is still in the middle of leases, it’s possible that landlords of the properties will ask a judge to talk to the Crumbs business and to find a way to make room for new businesses to fill those spaces while setting Crumbs’ debts. Crumbs allegedly went into “full shutdown mode” on July 7, but it may be continuing some of its leases, especially if they are favorable to the company. Landlords may have some… Continue reading

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