Rudy Giuliani has agreed to a last-minute deal to end his personal bankruptcy case and pay about $400,000 to a financial adviser hired by his creditors.
Sorry, what I meant was why does he get to keep anything? I know he can’t pay it all, but he should have to sell everything he has to cover what he owes.
There are different kinds of bankruptcy, but generally it’s meant for people who are making a good faith effort to pay down their debts but are so underwater that it’s become impossible. Bankruptcy can restructure their debt in a way that makes it possible to pay off a portion of it, and often times they’ll be allowed to keep some assets (like a home or a car) since it’s generally understood that losing those things will basically guarantee that the debtor will no longer be able to earn an income. The creditors want to recover as much of the debt as they can, and understand that once they’ve made someone homeless they won’t be getting any more money.
Of course, bankruptcy courts aren’t likely to look at a guy who has multiple multi-million dollar residences and decide he’s making a ‘good faith effort’ to pay his debts.
What will probably happen is Rudy will be forced to liquidate his properties but be allowed to keep just enough money to afford a sad little apartment above a bowling alley or whatever. Then, after most of the money from those liquidations has been spent of lawyers fees (his own lawyers and his creditors lawyers) he’ll attempt to go through bankruptcy again and actually be successful.
Sorry, what I meant was why does he get to keep anything? I know he can’t pay it all, but he should have to sell everything he has to cover what he owes.
There are different kinds of bankruptcy, but generally it’s meant for people who are making a good faith effort to pay down their debts but are so underwater that it’s become impossible. Bankruptcy can restructure their debt in a way that makes it possible to pay off a portion of it, and often times they’ll be allowed to keep some assets (like a home or a car) since it’s generally understood that losing those things will basically guarantee that the debtor will no longer be able to earn an income. The creditors want to recover as much of the debt as they can, and understand that once they’ve made someone homeless they won’t be getting any more money.
Of course, bankruptcy courts aren’t likely to look at a guy who has multiple multi-million dollar residences and decide he’s making a ‘good faith effort’ to pay his debts.
What will probably happen is Rudy will be forced to liquidate his properties but be allowed to keep just enough money to afford a sad little apartment above a bowling alley or whatever. Then, after most of the money from those liquidations has been spent of lawyers fees (his own lawyers and his creditors lawyers) he’ll attempt to go through bankruptcy again and actually be successful.