Technical Definitions: What is Bankruptcy? Bankruptcy Definition.

Free Definitions: Business: Financial

Bankruptcy Definition

A condition in which a business cannot meet its debt obligations and petitions a federal district court for either reorganization of its debts or liquidation of its assets.

In the action the property of a debtor is taken over by a receiver or trustee in bankruptcy for the benefit of the creditors. This action is conducted as prescribed by the National Bankruptcy Act, and may be voluntary or involuntary.

Bankruptcy can be under several conditions, often referred to as Chapters. Thus, you can have different organizations or individuals file for different kinds of bankruptcy.

Definition Provided By SBA.gov