Bankruptcy

A company can declare Bankruptcy if they can no longer repay their creditors. The company can then either reorganise the debts or liquidate the assets of the Company.

Bankruptcy is a legal process and occurs when the debts of a Company or a person cannot be repaid. There are laws governing Bankruptcy and the petition can be filed by either the debtor or the creditors. The law provides for either the reorganisation or liquidation of the business and assets made available to repay the creditors. In the U.S. Bankruptcy is handled in Federal Courts and the procedures is described in the U.S. Bankruptcy Code. There are various Chapters in the Code which deal with various types of Bankruptcy. Corporations filing for Bankruptcy do so under Chapter 11, offering a Company to reorganise and remerge as a viable business. While Chapter 7 relates to individual Bankruptcy.