(redirected from Bankrupcy)
Also found in: Dictionary, Thesaurus, Legal, Financial.
Related to Bankrupcy: Chapter 13


bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most instances, to discharge the debtor from further liability. In the United States, bankruptcy is controlled by a federal law adopted in 1898 and amended several times, as by the Chandler Act (1938) and the Bankruptcy Reform Act (1978).

Bankruptcy proceedings may be voluntary (instituted by the debtor) or involuntary (instituted by creditors). The debtor may be insolvent—i.e., unable to pay all debts even if the full value of all assets were realized—or may become insolvent when current obligations mature. Bankruptcy is also permitted when the discharge of debts would otherwise be unduly delayed, e.g., if the debtor has fraudulently transferred property to put it out of a creditor's reach. When a person or corporation has declared or been adjudged bankrupt, preferred creditors (e.g., unpaid employees, or the federal government) are paid in full, and the other creditors share the proceeds of remaining assets.

The bankrupt individual receives more lenient treatment in the United States than in perhaps any other country, so that business initiative is not stifled by the threat of criminal or civil penalties following unintentional commercial failure. This ideal is evident in Chapter 11 of the bankruptcy code, which permits courts to reorganize the assets of failing businesses instead of ordering complete liquidation of these assets. The 1978 revision of the code made it easier for corporate management to remain in control of a company during reorganization. These more lenient provisions led to a rapid increase in filings in the 1980s and 1990s. In 2005 Congress passed a significant revision of the bankruptcy code affecting individuals, prompted in part by the increase in filings since 1978. Under the new law, it is harder for an individual to file a Chapter 7 bankruptcy, which extinguishes a person's debts, and it is easier for creditors to secure repayment of a debt over time. The changes were strongly supported by banks and credit card companies, but were also criticized by a number of bankruptcy experts for placing additional burdens on middle income families while not closing loopholes that benefit bankrupt corporations and wealthy individuals. Chapter 9 of the code provides for the reorganization of bankrupt municipalities.


See study by T. Jackson (1986).

The Columbia Electronic Encyclopedia™ Copyright © 2022, Columbia University Press. Licensed from Columbia University Press. All rights reserved.


See also Poverty.
Birotteau, César
ruined by bad speculations and dissipated life. [Fr. Lit.: Greatness and Decline of César Birotteau, Walsh Modern, 58]
Black Friday
day of financial panic (1869). [Am. Hist.: RHDC]
Black Tuesday
day of stock market crash (1929). [Am. Hist.: Allen, 238]
green cap
symbol of bankruptcy. [Eur. Hist.: Brewer Note-Book, 390–391]
Harland, Joe
drunk who loses fortune on Wall Street. [Am. Lit.: The Manhattan Transfer]
Hassan, Abu
pretends to be dead to avoid debts. [Ger. Opera: von Weber, Abu Hassan, Westerman, 138–139]
Henchard, Michael
loses business and social standing through bad financial planning. [Br. Lit.: Mayor of Casterbridge]
Lydgate, Tertius
driven deeper into debt on daily basis. [Br. Lit.: Middlemarch]
Panic of 1873
bank failures led to extended depression. [Am. Hist.: Van Doren, 267–268]
Queer Street
condition of financial insolvency. [Am. Usage: Misc.]
Allusions—Cultural, Literary, Biblical, and Historical: A Thematic Dictionary. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
He made headlines in October when the Moststroy group of companies, one of the three largest infrastructure construction groups in the country, which he is widely believed to control, filed for bankrupcy after its bank accounts had been frozen because of unpaid debts.
The Straits Chinese community went into decline during the Great Depression, when many family businesses were forced into bankrupcy. The Second World War and the slump in commodity prices of the mid- 1950s had similarly adverse effects.
And when the one nationalised bank, Anglo Irish, commits to lending EUR68million to a developer fighting bankrupcy while they refuse to lend tiny sums to small businesses or homebuyers, that suspicion grows stronger.
Keywords: Bankrupcy, Neural networks, Thailand, Time series prediction, financial variables, Principal component analysis (PCA)
"Many of my clients would have faced bankrupcy or insolvency had I not won their cases.
(2006) show that the loss of human capital adds to the costs of barnkruptcy, and therefore argue that bankrupcy costs might be of the same order of magnitude as tax benefits.
If that isn't scary enough, consider that--just five years since its near bankrupcy and subsequent rescue by Renault--the company has erased its debt and achieved record profits for its fiscal year 2003 (ending March 31, 2004) with an 11.1 percent margin and 21.1 percent return on investment.
But if you are close to bankrupcy, an Individual Voluntary Arrangement (IVA) may be more suitable and can reduce your overall debt to make it more manageable.
Complex patterns of vertical integration in the forest product industry: Systematic and bankrupcy risks.
The winner of the largest number of licenses, NextWave, was the subject of bankrupcy litigation until a Supreme Court ruling in early 2003.