What is ‘Quick-Rinse Bankruptcy’
A bankruptcy proceeding that is structured to move through legal proceedings faster than the average bankruptcy. The term “quick-rinse bankruptcy” first emerged during the credit crisis that started in 2008 and was used to describe the planned bankruptcies of U.S. automotive giants Chrysler and General Motors. In order for quick-rinse bankruptcies to be effective, interested parties must negotiate prior to the proceedings. These negotiations take place between the government, debtholders, unions, shareholders and other parties in order to prevent filings by these parties in court that would otherwise clog up the process.
Explaining ‘Quick-Rinse Bankruptcy’
Pre-negotiated bankruptcies arose during the credit crisis of 2008 due to the perceived impact that the Chrysler and GM failures would have on the economy. It was argued that an untimely bankruptcy would result in massive layoffs and further stunt economic growth. As an example of a normal bankruptcy for an automotive company, one should look at the bankruptcy of Delphi Corp., which went into bankruptcy in 2005 and still had not emerged by 2009.
Further Reading
- The Chrysler Bankruptcy and Reorganization with FIAT: A United Sates, Rules-Based Regulation Should Control Future Labor Disputes between the US and Italian … – heinonline.org [PDF]
- Institutional Choice in an Economic Crisis – heinonline.org [PDF]
- The global financial crisis – www.emerald.com [PDF]
- From Chrysler and General Motors to Detroit – heinonline.org [PDF]
- Strategii lingvistice oportune: marcarea metaforelor de afaceri în limba engleză – www.ceeol.com [PDF]
- America's Populist Imaginary – books.google.com [PDF]
