Order Approving Disclosure Statement: Fill & Download for Free

I find it funny how little people understand about giving and receiving orders, and authority. Short answer, yes, sometimes. But, they can also give orders to others that out rank them, including officers, again…sometimes. Military members in general have no authority, they use the authority of those above them through verbal and written orders and regulations. Let me explain.Once upon a time I was a young E4, and was tasked with handling all intelligence duties for a small group of Americans on a British installation. One of those duties was controlling access to a classified facility, I was tasked with this duty by a LtCol who was my commander. While he did not know exactly what I needed to do, he was ultimately responsible, and rightfully he was concerned my lack of experience and rank weren't the right fit for this job. I assured him that I knew this was part of my duties, and had been studying the appropriate regulations for months…I was ready, I knew my responsibilities inside and out.Two months later we were ramping up for Operation Iraqi Freedom, and the amount of Americans would be increasing quickly. My commander informed me of the Major General that would be the new commander of US forces on the installation, and I immediately made contact with the general's aid informing him of the facilities and capabilities he would be inheriting. I also informed him of the information I needed to verify clearances to grant access to my facility, and to have computer accounts ready on their arrival.Two weeks later the General and his team arrived. First stop, my facility to store the classified information they brought with them. At the door I verified IDs, and allowed everyone to enter…except for the General. You see, the general refused to provide his social security number, so I hadn't been able to verify his clearance…sorry, no access for you.He ranted, he raved, he called me every name in the book. Calmly I turned to my commander, sir, the general and his team had been informed of the requirements to enter our facility dictated by Department of Defense Instructions. That instruction is signed by the Director of National Intelligence, and no one present has the authority to approve an exception to policy.I got cussed some more, then the General said, Col…your office…NOW!The General's aid, a Major, started profusely apologizing to me, he said he didn't know why the General wouldn't comply, he always did before, just not this time. He even went as far as to order the major to not provide his information, a task the major would usually take care of.I went to my office and retrieved the printed and highlighted portion of the DODI, and took it to my commander, then excused myself. Moments later the major was called in, and returned with a post-it with the General's social. I verified his clearance and returned with his access card, already created of course, same with his accounts…he had to be cleared, no way he wasn't, but I had a duty to comply with regs.I walked in to my commanders office, had the General sign a non disclosure statement as one wasn't on file for him, and handed him his access card. His stare was like the world was ending, I was confident in my understanding and compliance with the regs, and I was terrified.Then he smiled at me…Airman, when the major told me an Airman was in charge or the facility I knew you couldn't be up to the task, I just knew you would fold under pressure…but you didn't, you stood your ground and followed the instructions to the letter, fine job, keep it up.When following written instructions you have the authority of the person that signed them.Everyone in the military, all the way to the Joint Chiefs, are issuing orders based based on instructions from their leadership, and those orders must be complied with…even if from a lowly E4.

Bankruptcy relief is probably the most democratic thing that exists in federal law. Anyone and anything can file for bankruptcy relief. However, corporations and other non-living entities have restrictions that living persons do not. One big one is that a corporation does not get a discharge of their debts. They can and do propose a plan of repayment, an elaborate document that has to be backed up with what is called a disclosure statement explaining, among other things, why they filed in the first place, what they plan to do with repaying or otherwise settling all of their pre-petition debts, and financial information supporting why creditors should vote to approve their plan. Some of them get a trustee appointed by the court at the request of their creditors, or some of them at least, and when that happens, what results is generally a liquidation where the company’s assets are just sold off because while a trustee has the authority to operate the entity, the trustee has no long-term attachment and is just supposed to see how best the debts can be paid in the short term. That always means a liquidation. This means that the family and owns the drug company are risking losing control of it.Everyone and every entity with a financial interest in the company immediately has a lower rank of importance than the holders of debt, bonds, indentures and so on. The bills, past and present rank higher. Unpaid employees rank higher. Without getting into the statute that lists who gets what in order of priority, it is very unusual that the original owners of the corporation keep control; the creditors can be given stock in exchange for the debt, but if they accept that, it always involves those creditors becoming the new owners of the entity. It is possible, however, that the original shareholders get some distribution, but that commonly requires the consent of all of the groups of creditors who rank higher than the original shareholders in terms of their rights to distribution and repayment. What is likely is that the family will lose a lot of control; they certainly won’t emerge from this with the same controlling power they had before the filing. However, in this instance the family is wealthy enough to where they can risk coming out with nothing in order to eliminate the many lawsuits, filed or not at this point.Do keep in mind that “fair” is not a legal concept. Courts are not even allowed, other than in rare instances, to even consider that. The purpose of the law was initially to end the acts of offended people and companies who pretty much took whatever actions, including murder, that seemed to be needed. I refer you to the period when the East Indian Company was taking over most of India and was so abusive that Queen Victoria had to become an Empress in order to bring some form of law and order to that benighted country. Closer to home, consider that the native Americans in the US were nearly exterminated by people who wanted to take something - often land - that the natives had. While the government of the US broke every treaty they made, at least the mass slaughter stopped. That is what governments do - they stop random killings and want a monopoly on violence. Because the mind set is always transactional, order is more important than “fair”. At least it permits survival.So rid yourself of the idea of “fair” and look to the Bankruptcy Code, which has a long history of statutes. Before 2005, the Code was much kinder to natural persons than now. The sweeping amendments in that year made the Code much more confrontational and codified a number of creditor abuses - but not much to corporations (at least larger ones). You can thank then-President Bush and the Republican party for the horrors of all of that. The only politician who really fought those changes was then-Professor Elizabeth Warren, who provided huge studies and other evidence to refute the creditors’ claims that consumers were somehow “abusing” bankruptcy relief. That largely meant that consumers were emerging with the wherewithall to rebuild their financial lives, and the Republicans pretty much put paid to that idea. Since then, however, some of the worst abuses have been removed, partly by decent judges, and partly by the slow recognition in some quarters (particularly credit unions) that the powers they were given were fun, but were cutting deeply into people’s ability to make any reasonable repayments. So while they depended largely on courts to rein creditors’ “rights” in, it did happen.But as to corporations, however, they have one huge advantage over individuals - they can issue stock and warrants as repayment, whereas individuals cannot and must actually use money to repay their debts.The interesting points will be whether the Sacklers were sufficiently disciplined to recognize the possibilities of the loss of control. Just having access to good and competent legal advice does not mean listening and actually following it. You need only look at our president to see someone who just tries to make it up as he goes along, and how badly that has affected the government’s actions in the present pandemic to see the results of having access, but not listening. For their own sakes, I would hope the Sacklers are not in that situation because you can be sure they have certainly had access to lawyers who can and would advise them on how to come out with the maximum benefit from this filing that the law allows. It’s going to be an interesting case to watch.But remember - “fair” is not a legal concept. What is is doing the best possible under each given set of facts and keeping people from “taking the law into their own hands”.

Corporate Bankruptcy & Your InvestmentWhat Happens to Bondholders When a Company Files for Bankruptcy?When a public company files for bankruptcy, everyone with a stake in the company, from employees to creditors to bondholders, is concerned about the future of the company and the outcome of the bankruptcy proceeding. For bondholders, here's some general information to help understand what could happen to your investment.QuestionWhat is bankruptcy?AnswerGenerally, bankruptcy is the inability of a company to pay its debts as they become due. Public companies file for protection under the federal bankruptcy laws when their liabilities or debts exceed the value of their assets, or they are unable to pay their bills. A bankruptcy filing gives a company an opportunity to reorganize its business in hopes of returning to profitability or completely closing down operations and selling off assets, then using the money to pay off its debts in a process known as liquidation.QuestionWhat happens when a company files for bankruptcy?AnswerPublic companies can file for bankruptcy protection under either Chapter 7 or Chapter 11 of the federal bankruptcy laws.In order of their priority...In a bankruptcy, assets and proceeds are distributed to satisfy claims in order of the claims' priority. Investors who take the least amount of risk are paid first. As a result, creditors and bondholders who lend a company money will be paid before its stockholders, who have purchased an ownership stake. Creditors are paid after legal and administrative costs have been covered.Secured creditors, whose claims are protected by specific assets or collateral, such as real estate, are paid first.Then unsecured creditors, which often include bank lenders, bondholders and suppliers, are next in line.Stockholders, who have purchased a portion of the company, are paid last, if there is money available after the secured and unsecured creditors' claims have been paid.Under Chapter 7, the corporation is liquidated after the federal courts have determined that a reorganization is not worthwhile. A court-appointed trustee will liquidate all of the company's assets and distribute the proceeds in order to satisfy claims. Claims are considered in order of their priority.Under Chapter 11, a company will attempt to reorganize and continue operations. Management continues to run the day-to-day operations, but a bankruptcy court must approve all major business decisions.The U.S. Trustee Program, a component of the Department of Justice responsible for overseeing the administration of bankruptcy cases, will establish and oversee several committees to represent the interest of parties including creditors, such as banks and bondholders, and stockholders. The committees work with the company to develop a reorganization plan.The reorganization plan must be approved by creditors, and stockholders and confirmed by the bankruptcy court. However, even if some of the groups vote to reject the plan, the court can approve it if it believes the plan treats creditors and stockholders fairly.QuestionWhat will happen to my bonds?AnswerBonds represent debt which a company has agreed to repay with interest. As such, when a company files for federal bankruptcy protection, bondholders have a better chance of getting repaid than stockholders. While bankruptcy laws determine the order of repayment, stockholders, considered owners of the company, have the last claim on assets.In a Chapter 7 bankruptcy, bondholders may receive a portion of the value of their bonds. After being notified of the bankruptcy filing, bondholders should file a claim so they can receive a payment if cash is available after other expenses have been paid. Proof of claim forms are available on the Administrative Office U.S. Courts Web site.When a company fails to pay principal and interest when due, a default occurs. In a corporate bankruptcy or liquidation, although secured creditors, bondholders and holders of other senior debt issues may receive some distribution of corporate assets, it is rarely enough to "make whole" their total investment. Bonds of companies in default may trade at very low prices, if they trade at all, and liquidity may disappear.Bonds may continue to trade once a company has filed for bankruptcy under Chapter 11. However, bondholders will stop receiving principal and interest payments, causing a default to occur. Also the value of the securities could decline sharply and trading could be extremely limited.In addition, as a part of the court-approved reorganization plan, bondholders may receive new stock, new bonds, or a combination of new stock and bonds in exchange for their bonds. The new securities may also be worth less than the old ones.QuestionHow will I know if a company has filed for bankruptcy?AnswerOften, news reports provide investors with their first information about a company's bankruptcy filing. However, if you hold bonds through a broker, your broker should contact you, forwarding information from the company. If the bonds are held in your name, then you should receive information directly from the company. Investors should also contact their brokers or investment advisor if they do not receive any information from the company.Investors may be asked to vote on a company's reorganization plan. Before you do, you should receive a copy of the plan and a ballot, as well as a court-approved disclosure statement and information on any court hearings on the plan's confirmation and deadlines for filing objections to the plan.Important tax issuesIf securities lose their value as the result of a bankruptcy filing, investors may be able to take an income tax deduction for worthless securities.An accountant, tax or bankruptcy attorney or investment advisor can provide additional information, or contact the Internal Revenue Service for information and publications to find out if your securities meet the IRS criteria.