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The basics of a quick rinse bankruptcy
Financial experts began discussing quick rinse bankruptcies at the end of the 2008 global fiscal crisis. This then newly minted term described how the bankruptcies of Chrysler and General Motors were handled.
A key factor in a quick rinse bankruptcy is that a debtor can successfully come to a debt settlement with their creditors before going to the bankruptcy court. Broken down to its most basic definition, a quick rinse bankruptcy is a pre-negotiated bankruptcy.
The benefit of this fast, pre-negotiated bankruptcy for large corporations is that it prevents default from dragging on for months or years. In the interim, creditors, shareholders and unions are financially affected. In addition, when properly executed, a quick rinse bankruptcy allows a company to file for bankruptcy and quickly reorganize itself without interrupting its operation.
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