Bankruptcy
Noun
US
/ˈbæŋkrəptsi/
UK
/ˈbæŋkrəptsi/
US
/ˈbæŋkrəptsi/
UK
/ˈbæŋkrəptsi/
Legal process where insolvent person or business liquidates or reorganizes debts under court supervision.
Company files Chapter 11 bankruptcy to reorganize debts while continuing operations.
In United States v. Katz (2009), court addressed bankruptcy trustee obligations.
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Chapter 7 vs. Chapter 13 - Chapter 7 liquidates assets, discharges debts. Chapter 13 allows individuals to reorganize debts. Automatic stay prevents creditor collection actions.
Provides debt relief and fresh start for insolvent individuals/businesses.
Balances creditor rights with debtor rehabilitation.