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Just How Damn Easy Is It to File for Bankruptcy?

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With one in 300 Americans declaring bankruptcy (compared to one in 500 Britons), America is "the Michael Phelps of debt liquidation," writes The Atlantic's business and economics editor Megan McArdle. Considering both personal and corporate bankruptcy (a timely topic as everyone from Meruelo Maddux Properties Inc. to Roosevelt Lofts LLC declares bankruptcy), McArdle considers whether the country's bankruptcy rules, which allow failed business to "escape as quickly as possible if [disaster] arrives," need to be changed. Here's one argument: "Our leniency toward those with unsustainable debts helps not only profligate debtors, but the rest of us as well. Less onerous bankruptcy procedures boost rates of entrepreneurship: reduce the cost of failure, and people become more willing to take risks. America’s business environment is much more dynamic than that of Europe or Japan, for many reasons—and our generosity to capitalism’s losers is one of them." What's the counter-argument? She cites the now-famous video of CNBC's Rick Santelli mouthing off about "subsidiz[ing] the losers' mortgages," and points to bankruptcy rules in Britain, where liquidation, not reorganization, is the norm. But in the end, she determines our rules work fine. (In the end, our bankruptcy rules allow individuals and businesses a second act--another famous American phenomena.) "We all agree that it is a very terrible thing that should be avoided at all costs—but once it has actually happened, we try to forget about the past as quickly as possible, and we focus mostly on providing a predictable and relatively painless way for the insolvents to get back on their feet. That strategy, developed over time through trial and error, has served us well for most of our history." Now, about those ghost buildings...
· Sink and Swim [The Atlantic]
· Downtown's Roosevelt Lofts Files for Chapter 11 Bankruptcy [Curbed LA]

Roosevelt Lofts

727 W. Seventh St., Los Angeles, CA