ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Definition: When an organisation is unable to honour its financial obligations or make payment to its creditors, it files for bankruptcy. A petition is filed in the court for the same where all the outstanding debts of the company are measured and paid out if not in full from the company’s assets.

Detailed explanation-2: -Chapter 7 bankruptcy, also known as “liquidation bankruptcy” or “straight bankruptcy, ” is a legal process that allows qualifying debtors to get most of their debts discharged (wiped out). If you qualify for Chapter 7, you can get your unsecured debts wiped out, usually within 6 months of filing.

Detailed explanation-3: -Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Detailed explanation-4: -Bankruptcy is a legal process by which you may be discharged from most of your debts. Its purpose is to permit an honest, but unfortunate debtor to obtain a discharge from most debts, subject to reasonable conditions.

Detailed explanation-5: -Generally speaking, insolvency refers to situations where a debtor cannot pay the debts they owe. For instance, a troubled company may become insolvent when it is unable to repay its creditors money owed on time, often leading to a bankruptcy filing.