bankruptcy

Legally declared insolvency, or inability to pay creditors.

Note: If an individual or a corporation declares bankruptcy, a court will appoint an official to make an inventory of the individual's or corporation's assets and to establish a schedule by which creditors can be partially repaid what is owed them.

Note: An individual who is lacking a specific resource or quality is sometimes said to be bankrupt, as in intellectually bankrupt or morally bankrupt.

Bankruptcy

The state of a person or firm unable to repay debts.

Investopedia Commentary

If the bankrupt entity is a firm, the ownership of the firm's assets is transferred from the stockholders to the bondholders. Shareholders are the last people to get paid if a company goes bankrupt. Secure creditors always get first grabs at the proceeds from liquidation.

Related Links

An Overview Of Corporate Bankruptcy
Z Marks The End

See also: Absolute Priority, Bankruptcy Risk, Bond, Chapter 11, Chapter 7, Discharge in Bankruptcy, Prepackaged Bankruptcy, Senior Security, Stalking Horse Bid, Stockholders Equity, Technical Bankruptcy, Vulture Fund

bankruptcy

The financial status of a firm that has been legally judged either to have debts that exceed assets or to be unable to pay its bills. Formal bankruptcy may result in reorganization and continued operation of the firm or it may require liquidation and distribution of the proceeds. In either case, most security owners, especially shareholders, are likely to suffer losses. Stock transaction tables indicate that a company is in bankruptcy proceedings by appending vi or q immediately before the name of the stock. See also Chapter 7, Chapter 11, reorganization.