BROWSE

Quick-Rinse Bankruptcy

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]
… "The effects of such demand declines are readily understood from some simple economics … It was considered a "quick rinse" because Fiat took management control of a new version … in key growth markets and substantial cost saving opportunities." US bankruptcy laws permitted …

Institutional Choice in an Economic CrisisInstitutional Choice in an Economic Crisis
heinonline.org [PDF]
… "The effects of such demand declines are readily understood from some simple economics … It was considered a "quick rinse" because Fiat took management control of a new version … in key growth markets and substantial cost saving opportunities." US bankruptcy laws permitted …

The global financial crisisThe global financial crisis
www.emerald.com [PDF]
… "The effects of such demand declines are readily understood from some simple economics … It was considered a "quick rinse" because Fiat took management control of a new version … in key growth markets and substantial cost saving opportunities." US bankruptcy laws permitted …

From Chrysler and General Motors to DetroitFrom Chrysler and General Motors to Detroit
heinonline.org [PDF]
… "The effects of such demand declines are readily understood from some simple economics … It was considered a "quick rinse" because Fiat took management control of a new version … in key growth markets and substantial cost saving opportunities." US bankruptcy laws permitted …

Strategii lingvistice oportune: marcarea metaforelor de afaceri în limba englezăStrategii lingvistice oportune: marcarea metaforelor de afaceri în limba engleză
www.ceeol.com [PDF]
… "The effects of such demand declines are readily understood from some simple economics … It was considered a "quick rinse" because Fiat took management control of a new version … in key growth markets and substantial cost saving opportunities." US bankruptcy laws permitted …

America's Populist ImaginaryAmerica's Populist Imaginary
books.google.com [PDF]
… "The effects of such demand declines are readily understood from some simple economics … It was considered a "quick rinse" because Fiat took management control of a new version … in key growth markets and substantial cost saving opportunities." US bankruptcy laws permitted …



Q&A About Quick-Rinse Bankruptcy


How does a quick-rinse bankruptcy differ from a normal bankruptcy?

In a quick-rinse bankruptcy, interested parties negotiate prior to the proceedings and agree on terms of the filing before it occurs.

Who are some interested parties in a quick-rinse bankruptcy?

The government, debtholders, unions, shareholders and other parties are all involved in negotiations.

What is Quick-Rinse Bankruptcy?

A bankruptcy proceeding that is structured to move through legal proceedings faster than the average bankruptcy.

When did prenegotiated bankruptcies arise during the credit crisis of 28?

Prenegotiated bankruptcies arose during the credit crisis of 28 due to perceived impact that Chrysler and GM failures would have on economy. It was argued that an untimely filing would result in massive layoffs and further stunt economic growth.

Are there any disadvantages to using prenegotiated bankruptcies over normal ones ?

Yes; they may be seen as unfair because they allow certain groups (such as creditors) more time to prepare than others (such as employees).

What is another term for "quick rinse" used when referring to auto industry bankruptcies?

"Prepackaged" or "prearranged" bankruptcies

Why do prenegotiated bankruptcies occur for large companies like Chrysler or GM?

To prevent unnecessary clogging up of court system with filings by these parties that could otherwise slow down process.

What should one look at as an example of normal bankruptcy for automotive company?

One should look at Delphi Corp., which went into Chapter 11 protection in 25 but still had not emerged by 29.