Debt Restructuring Fraud

A sneaky (and illegal) way to profit from the debt restructuring process (See: Debt Restructuring).

When a person or company declares bankruptcy, the process goes something like this: 1) all their assets go into a pile, 2) all their creditors line up to get paid, 3) a judge tallies up all the assets and figures out a fair way to distribute the assets. See: Chapter 7. And see: Chapter 11.

In restructuring fraud, the company or person declaring bankruptcy attempts to hide assets from the process. If successful (by, say, burying stuff in the backyard or sending it to an offshore bank account), they will be able to keep the asset away from the creditors and squirrel it away for themselves later.

This act is illegal, people. Don't do it.