Silicon Valley Business School

Contents of SVBS Course: Bankruptcy & Cash Crisis Management

Lack of sufficient finance is a common issue for entrepreneurs and startup companies in all sectors of business, but this can be an acute problem for companies spending time and resources to develop new technologies. Various tools and techniques are discussed in this module to help management navigate a Company through cash crisis and understand the issues involved. The U.S. bankruptcy (Chapter 11, Chapter 7) regulations and protections are explored.

Learning Objectives and Outcomes

Upon completion of this course you will be able to:

Determine if a business is insolvent and understand the steps involved in a Chapter 11 reorganizations and Chapter 7 liquidation.
Collateralize a loan or financing through a lien or security interest on assets.

Course Sections

The course is organized into the following sections:

Bankruptcy: Navigating a High Tech Startup through Cash Crisis
Bankruptcy: Corporate Insolvency ~ Chapter 11 Reorganization
Bankruptcy: Chapter 7 Bankruptcy & Liquidation
Bankruptcy: Secured Transactions
Bankruptcy: Bankruptcy Relief for Individuals & Sole Proprietors
Bankruptcy: Introduction – Source of Law

Bankruptcy: Introduction – Source of Law
  • Video ~ Corporations: Insolvency
  • This voice narrated slideshow presents creditors rights, Chapter 7 and Chapter 11 reorganizations. Bankruptcy is governed by federal law, under Article 1, Section 8 of the U.S. Constitution which states: "The Congress shall have Power.. To establish.. uniform Laws on the subject of Bankruptcies throughout the United States".

  • Video ~ What Are the Various Types of Bankruptcy?
  • Video explains the different types of bankruptcy in the US.

  • Video ~ Bankruptcy Basics - Part 1: Introduction
  • What is bankruptcy? What happens in a bankruptcy case? Bankruptcy is a legal process that provides relief for individuals who can no longer pay all of their debts.

  • Video ~ Bankruptcy Basics - Part 2: Types of Bankruptcy
  • A brief review of the three main types of bankruptcy cases for individuals chapters 7, 11, and 13.

  • Video ~ Bankruptcy Basics - Part 3: Limits of Bankruptcy
  • Certain types of debt, such as child support, alimony, and most student loans, cannot be discharged in bankruptcy. Wrongful conduct may make some debts non-dischargeable. Examples of such conduct are incurring credit card charges without the intent or ability to repay, or obtaining loans using false financial information.

  • Video ~ Bankruptcy Basics - Part 4: Filing for Bankruptcy
  • How does someone file a bankruptcy case? In order to file for bankruptcy, an individual must take a credit counseling course to learn about alternatives to bankruptcy as well as accurately complete and file a number of documents.

  • Video ~ Bankruptcy Basics - Part 5: Creditors' Meeting
  • Video ~ Bankruptcy Basics - Part 6: Bankruptcy Crime
  • A debtor must be honest and accurate in dealing with the court or face serious consequences, including being charged with a bankruptcy crime.

  • Video ~ Bankruptcy Basics - Part 7: Courts Hearings
  • In some cases, a debtor may be required to appear at hearings before a bankruptcy judge.

  • Slideshow Handout ~ Corporations: Insolvency File
  • PDF slides for the learning material titled: "Video ~ Corporations: Insolvency".

  • Reading ~ Bankruptcy Definition
  • This article explains the basics of both Chapter 7 and Chapter 13 bankruptcy.

  • Reading ~ Bankruptcy ~ History
  • Explains the origins of bankruptcy law in the United States.

  • Reading ~ Bankruptcy Law in Canada - An Introduction
  • This article provides an introduction to bankruptcy law in Canada. A person can voluntarily enter bankruptcy by relinquishing his financial being to a third-party specialist called a trustee: In Canadian bankruptcy law, such an action is called an "assignment" and is supervised by the Court. A person can also be forced into bankruptcy by a creditor and through a Court order.

  • Reading ~ Bankruptcy: An Overview
  • An overview of bankruptcy, its types, and how can the process actually help you in various situations.

  • Reading ~ The Automatic Stay: Stopping Creditors with Bankruptcy
  • The automatic stay stops any lawsuit that is filed against you by a creditor, collection agency, government entity or other person seeking money from you.

  • Reference ~ Federal Rules of Bankruptcy Procedure
  • The Bankruptcy Rules and Forms govern procedure in cases under title 11 of the United States Code.

  • Book ~ Zero-to-IPO
  • Bankruptcy: Navigating a High Tech Startup through Cash Crisis
  • Reading ~ Startup Dissolved Overnight
  • How a startup dissolved overnight and laid off its 400 employees via email with no warning.

  • Reading ~ Pages 17-27 Zero-To-IPO
  • Chapter 1 of the book, Zero-to-IPO, by David Smith, explores the alternative routes and destinations for a startup journey. Chapter 2 presents a seven point travel plan for reaching your targeted destination. Bankruptcy and other forms of shutdown are discussed in the context of the startup journey.

  • Reading ~ Pages 251-299 Zero-To-IPO
  • Chapter 5 of the book Zero-to-IPO, by David Smith discusses "The Slippery Slope to Destination Shutdown", explaining how a cash crisis develops, how a startup venture can find itself in the freefall zone and in shutdown zone.

  • Reading ~ The Startup that Fell to Earth
  • Story of how a startup company collapsed after raising hundreds of millions of dollars in venture capital funding. Provides an example of how not to navigate a company out of cash crisis.

    Bankruptcy: Corporate Insolvency ~ Chapter 11 Reorganization
  • Video ~ Introduction to Chapter 11
  • Video explains Chapter 11 "Plan of Reorganization".

  • Video ~ Chapter 11: Bankruptcy Restructuring
  • This video provides an introduction to Chapter 7 and Chapter 11 bankruptcy, explains the relationship between assets, liabilities (debts) and equity and the process of putting a debtor in possession in a Chapter 11 reorganization.

  • Reading ~ Stay & Reorganization ~ Chapter 11
  • The chapter of the Bankruptcy Code providing for reorganization, usually involving a corporation or partnership.

  • Reading ~ Chapter 11 Bankruptcy
  • Reference ~ 11 U.S. Code Chapter 11 - Reorganization
  • Reading ~ Meetings of creditors and equity security holders
  • Chapter 11, code 11 U.S. Code § 341 requires a meeting of the creditors within a reasonable time.

  • Reading ~ Stalking Horse Bids
  • The initial bidder with whom the debtor negotiates a purchase agreement is called the "stalking horse" bidder. To encourage the first bidder to present an offer, break-up fees and other incentives are offered, subject to approval by the bankruptcy court.

    Bankruptcy: Chapter 7 Bankruptcy & Liquidation
  • Video ~ Chapter 7: Bankruptcy Liquidation
  • Video explains Chapter 7 bankruptcy and liquidations.

  • Reading ~ Filing for Chapter 7
  • Information on who qualifies for Chapter 7 bankruptcy, how debt is addressed in a Chapter 7 filing, and an overview of the rules covering this type of bankruptcy.

  • Reading ~ Who Can File for Chapter 7 Bankruptcy?
  • Reading ~ Chapter 7: How it Works
  • An overview of the early course of a typical Chapter 7 bankruptcy case.

  • Reading ~ Pros and Cons of Declaring Bankruptcy under Chapter 7
  • A list of pros and cons to consider when deciding whether Chapter 7 bankruptcy is the best option.

  • Reading ~ Bankruptcy Exemptions Under Chapter 7
  • This article outlines some of the common types of bankruptcy exemptions that may be available in a typical Chapter 7 filing.

  • Reading ~ Alternatives to Chapter 7 Liquidation
  • Reading ~ Chapter 7 Bankruptcy Checklist
  • Reference ~ 11 U.S. Code Chapter 7 - Liquidation
  • Reading ~ Role of a Chapter 7 Trustee
  • Chapter 7 Trustees (also known as panel trustees) are not government employees. They are private citizens appointed and supervised by the Office of the U.S. Trustee (a division of the U.S. Department of Justice) to administer bankruptcy cases under chapter 7 of the U.S. Bankruptcy Code.

  • Reading ~ Bankruptcy Asset Sales Overview
  • All asset sales by a Chapter 7 trustee are essentially an auction. The trustee has to provide notice to the creditors and gain approval from the court. A bidder cannot buy without the trustee going through the notice and auction process (inviting bids from others, but the first bidder can be a stalking horse bidder and negotiate a break-up fee.

  • Reading ~ Bankruptcy Asset Sale, Removal of Liens & Clear Title
  • A purchaser may not agree to purchase the assets if the purchase is not entirely “free and clear” of all liens, liabilities and encumbrances to clear title. While it is clear that Section 363(f) extinguishes all liens against the property, many courts have held that Section 363(f) also extinguishes all claims against the purchaser of the assets.

    Bankruptcy: Secured Transactions
  • Video ~ Secured Transactions
  • Video ~ Secured Transactions - Lesson 1
  • Video ~ Secured Transactions - Lesson 2
  • Video ~ Secured Transactions - Lesson 3
  • Video ~ Secured Transactions - Lesson 4
  • Video ~ What is a Lien?
  • A lien is nothing more than a property interest that secures a debt. A judgment can create a lien in real estate, or if the sheriff "levies" on property, that will create a lien on that property. The most important thing to keep in mind about a lien is that it relates to a specific piece of property.

  • Video ~ What is a Judicial Lien?
  • A judicial lien is a lien that arises after a judgment is entered against a defendant. Generally, a judgment automatically becomes a lien in real estate, that the defendant has in the county.

  • Video ~ What is Lien Perfection?
  • Frequently more than one lender will make a loan to someone secured by their home, their car, their business assets or their other property. Once a lender records a notice of their lien with a state or county recording office, other lenders will know of that lien's existence and decide whether or not to make a loan: The act of recording this notice with a state or county recording office is known as "Perfection". Priority of liens in a piece of property depends on the date that notice is recorded, also known as the date of perfection.

  • Slideshow Handout ~ Secured Transactions
  • PDF slides for the learning material titled: "Video~Secured Transactions".

  • Reading ~ How to Attach and Perfect Your Security Interest in Collateral
  • Bankruptcy: Bankruptcy Relief for Individuals & Sole Proprietors
  • Video ~ Bankruptcy Pros and Cons
  • The decision to file for bankruptcy can be a difficult one. It's important to consider the pros and cons and make sure that bankruptcy is your best option.

  • Video ~ Chapter 7 v. Chapter 13 for Individuals
  • This video outlines the differences of chapter 7 bankruptcy and chapter 13 bankruptcy, and provides information as to which option will be the best choice for you based on your financial situation.

  • Video ~ Bankruptcy Judgment Lien
  • In financially difficult times, as a homeowner, you may find yourself in the uncomfortable position of owing money you can't afford to pay, leading a creditor to obtain a judgment lien on your home. A lien can impact your ability to sell your home, leaving you to wonder if a judgment lien can be removed in bankruptcy.

  • Video ~ Bankrupcty ~ Can You Keep Your House?
  • Reading ~ Bankruptcy: Advantages and Disadvantages
  • A list of advantages and disadvantages to consider before declaring bankruptcy.

  • Reading ~ Is Bankruptcy a Good Idea?
  • A list of factors that should be taken into account when one is considering filing for bankruptcy.

  • Reading ~ Chapter 7 vs. Chapter 13 Bankruptcy
  • A comparison of Chapter 7 and Chapter 13 bankruptcy.

  • Reading ~ Facing Foreclosure? How Bankruptcy Can Help
  • The foreclosure process takes time. Most creditors do not begin foreclosing until the homeowner is two to three months behind on their mortgage payments. This gives the homeowner some time to consider alternatives to foreclosure, such as a loan forbearance, short sale, or deed in lieu of foreclosure. Should all of these alternatives fail, bankruptcy may help in several different ways.

  • Reading ~ Rapper 50 Cent Seeks Bankruptcy Protection
  • Reading ~ Rapper 50 Cent & Piles of Cash
  • Reading ~ Debt Discharge in Bankruptcy
  • Reading ~ Bankruptcy: Frequently Asked Questions
  • Information regarding some of the most commonly asked bankruptcy questions.

  • Video ~ How Often Can a Person File for Bankruptcy?
  • Bankruptcy provides people in financial trouble an important option for getting their life back together, but there are limits to how often a person can use this protection.

  • Reading ~ What Happens After Chapter 7 Bankruptcy?
  • Reading ~ Eliminating Tax Debts in Bankruptcy
  • In many cases, a debtor is still liable for tax debt after bankruptcy. However, bankruptcy law allows the discharge of tax debt only in some circumstances.

  • Reading ~ 2005 Bankruptcy Law Changes FAQ
  • Certificate Course
    This certificate tracks your progress and tests you in each section. Once you have passed all the quizzes, submitted an assignment and reviewed all the materials, you will be awarded a certificate of completion.