Bankruptcy 101

[Southern_Lenders]

As a young Entreprenure starting my own Finance Company, I need to understand more about this topic. If there are any other people in Finance/Banking or investors that had to deal with borrowers filing Bankruptcy, please tell me about your experience. Some questions I have:

1. How easy is it for a borrower to file bankruptcy to avoid their responsibilities to creditors?

2. Once someone files, does the lender take a 100% loss, and what if the loan is unsecured?

[The Stealthy One]

I think the cases of government meddling in the GM and Chrysler bankruptcy cases are a great lesson here. As we saw in both cases, secured, senior lenders were royally screwed. So no debt offering is completely safe. My best advice is to price this into your risk cost accordingly.

(Others here can probably offer more technically detailed responses than I.)