[Mengkudulangsat]

So how does this work in the US?

I thought companies in bankruptcy will be broken apart and its assets sold piecemeal. Can anyone who buy this out of auction get in one piece and debt-free?

[nico]

There are two types of corporate bankruptcy, chapter 7 and 11. Chapter 7 is what you are probably thinking about. Chapter 11 allows for “rehabilitation”, ie. negotiating debt, discharging some, and setting up a plan to get out of bankruptcy

Most of the times when you see the news reporting about prominent/public US companies filing for bankruptcy, it’s chapter 11. Which is also the case here with 23andme

In chapter 7, there is no rehabilitation, the whole company is handed over to a trustee, who is in charge of selling the assets (or abandoning them), and paying back the stakeholders

[friendzis]

Yeah, rest of the world calls one bankruptcy and the other restructuring, adding to confusion.

[Suppafly]

It really depends on how the people in charge of the bankruptcy, I'd assume preference is to sell the whole business unless it's not viable to do so, then it'd be broken into parts. Breaking into parts makes more sense when the company has several lines of unrelated business, in this case, it's basically one business so breaking it up wouldn't garner more money.

[sitharus]

This is chapter 11 bankruptcy, which is basically a way to say "We can't afford to pay our debts, but perhaps we can all come to an arrangement". It puts the courts in a position of oversight so any unreasonable parties can be worked with.

In other countries this may be referred to as voluntary administration, though the exact details of what it all means varies from country to country and I'm not a bankruptcy lawyer.