Unit 10 Bankruptcy US/UK differences

What is it? Although this is a familiar term, it is problematic because it means different things to different speakers of English. For example, in British legal English, only a person or a partnership may be made bankrupt, but in American legal English the term also refers to companies. However, the term is also commonly used in general and journalistic British English to refer to companies (see articles below from the BBC and the Economist, which both use British English). In British English, when a person is insolvent (i.e. unable to pay his/her debts) and is declared bankrupt by a court, a trustee is appointed to sell off (liquidate) the person’s assets. A UK company which is insolvent may go into administration (i.e. an administrator is appointed to rescue an insolvent company and recover creditors’ money). If this fails, the company may be liquidated (i.e. its assets are turned into cash). In the USA, Chapter 11 bankruptcy refers to a state where a company hands over control of its affairs to a bankruptcy court, and is protected from its creditors while it is being restructured. It is fairly common for a company to emerge from bankruptcy protection after several months and go on to be a successful business again. Why was it in the news in 2009? On 1 June 2009, General Motors, until recently the world’s largest car company, filed for Chapter 11 bankruptcy protection from its creditors. GM has debts of $172 billion, making this the largest ever industrial failure. The plan is to try to save the company by selling off many assets to leave a smaller and more sustainable ‘New GM’ to emerge from bankruptcy protection later this year. GM’s bankruptcy follows that of another of the ‘Big Three’ car makers, Chrysler, in April 2009. Where can I read more about it? Summary FAQ on GM’s Chapter 11 Filing, GM Re:invention.com (GM’s new website to report progress with its restructuring), 6th June 2009. Inside GM's bankruptcy filing, Fortune Magazine, 3rd June 2009. From biggest carmaker to biggest bankruptcy, BBC, 1st June 2009. Bankruptcy (introduction to bankruptcy in the UK, US and several other countries), Wikipedia. From CUP resources You might like to read the recent blog about GM's rescue and share issue