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8 file bankruptcy cases in 2015
There were eight bankruptcy cases, including the owner of Tinian Dynasty Hotel & Casino, that were filed in the U.S. District Court for the NMI in 2015.
Of eight bankruptcy cases, six were Chapter 7 petitions, and the rest were Chapter 11 petitions. Five were individuals and three were companies, according to court records.
Under Bankruptcy Chapter 7, most assets of the debtor are liquidated as quickly as possible to pay off his or her creditors to the extent possible and to free the debtor to start anew.
Chapter 11 Bankruptcy, on the other hand, allows a debtor to enter into an agreement with creditors under which all or a part of the business continues. Chapter 11’s objective is to adjust and reorganize a debtor’s obligations so as to allow the business to continue.
The all-time highest record of bankruptcy cases in the CNMI was in 2005 when 31 cases were filed.
One of the reasons why many cases were filed in 2005 was because it was beginning that year when the Bankruptcy Abuse Prevention and Consumer Protection Act took effect. The act increased the filing fee and made bankruptcy petitions stricter, among other things.
In 2001 and 2002, there were 25 bankruptcy cases filed, the second highest number filed in the CNMI.
The bad economy reportedly contributed to the filing of 25 petitions in 2002, while a bad economy made worse by the Sept. 11 terrorist attacks in the U.S. mainland reportedly triggered the filing of 25 petitions in 2001.
