Reading about Rite Aid filing for bankruptcy. They have 3.3 in debt. By claiming bankruptcy they just wash their hands of it? Who eats all the debt?
In: 20
There are different kinds of bankruptcy. The one Rite Aid is doing is called a “reorganization.” They aren’t going out of business. A reorganization allows a business to propose repayment of their debt on new terms that are different than what their debts require right now. That plan has to be approved by a majority of the creditors. It lets them change the terms of their debt, but doesn’t result in that debt being completely wiped clean. The reason creditors might accept this is because they might be more likely to be repaid. If creditors don’t approve a plan, Rite Aid might file a “going out of business” bankruptcy, where everything they own is sold and used to pay the creditors. Usually in that case, the creditors wind up being paid a fraction of what they are owed.
Latest Answers