- Noun: bankruptcy bangkrúptsee
- A state of complete lack of some abstract property
"spiritual bankruptcy"; "moral bankruptcy"; "intellectual bankruptcy"
- Inability to discharge all your debts as they come due
"the company had to declare bankruptcy"
- A legal process intended to insure equality among the creditors of a corporation declared to be insolvent
Derived forms: bankruptcies
See also: bankrupt
- A state of complete lack of some abstract property
noun [U,C] (plural bankruptcies)
ACT OF BANKRUPTCY, ASSIGNEE IN BANKRUPTCY, INVOLUNTARY BANKRUPTCY, TRUSTEE IN BANKRUPTCY, VOLUNTARY BANKRUPTCY
the state of being bankrupt:
They would face bankruptcy if they had to repay the loan.
There could be further bankruptcies among small farmers.
The company filed for bankruptcy (= asked to be officially bankrupt) earlier this year.
The company won bankruptcy court approval to sell assets.
⇨ INSOLVENCY, BANKRUPT
❖ to be on the brink of/be on the verge of/face bankruptcy
◆ to be forced into/collapse into bankruptcy
◆ to declare/file for/seek bankruptcy
◆ to avert/avoid/stave off bankruptcy
◆ a bankruptcy court/judge
The state of an individual who is unable to pay his or her debts and against whom a bankruptcy order has been made by a court. Such orders deprive bankrupts of their property, which is then used to pay their debts. Bankruptcy proceedings are started by a petition, which may be presented to the court by (1) a creditor or creditors; (2) a person affected by a voluntary arrangement to pay debts set up by the debtor under the Insolvency Act 1986; (3) the Director of Public Prosecutions; or (4) the debtor. The grounds for a creditors' petition are that the debtor appears to be unable to pay his or her debts or to have reasonable prospects of doing so, i.e. that the debtor has failed to make arrangements to pay a debt for which a statutory demand has been made or that a judgment debt has not been satisifed. The debts must amount to at least £750. The grounds for a petition by a person bound by a voluntary arrangement are that the debtor has not complied with the terms of the arrangement or has withheld material information. The Director of Public Prosecutions may present a petition in the public interest under the Powers of Criminal Courts Act 1973. The debtor may also present a petition on the grounds of being unable to pay his or her debts.
Once a petition has been presented, the debtor may not dispose of any property. The court may halt any other legal proceedings against the debtor. An interim receiver may be appointed. This will usually be the official receiver, who will take any necessary action to protect the debtor's estate. A special manager may be appointed if the nature of the debtor's business requires it. paraThe court may make a bankruptcy order at its discretion. Once this has happened, the debtor is an undischarged bankrupt, who is deprived of the ownership of all property and must assist the official receiver in listing it, recovering it, protecting it, etc. The official receiver becomes manager and receiver of the estate until the appointment of a trustee in bankruptcy. The bankrupt must prepare a statement of affairs for the official receiver within 21 days of the bankruptcy order. A public examination of the bankrupt may be ordered on the application of the official receiver or the creditors, in which the bankrupt will be required to answer questions about his or her affairs in court.
Within 12 weeks the official receiver must decide whether to call a meeting of creditors to appoint a trustee in bankruptcy. The trustee's duties are to collect, realize, and distribute the bankrupt's estate. The trustee may be appointed by the creditors, the court, or the Secretary of State and must be a qualified insolvency practitioner or the official receiver. All the property of the bankrupt is available to pay the creditors, except for the following: equipment necessary for him or her to continue in employment or business, necessary domestic equipment; and income required for the reasonable domestic needs of the bankrupt and his or her family. The court has discretion whether to order sale of a house in which a spouse or children are living. All creditors must prove their claims to the trustees. Only unsecured claims can be proved in bankruptcy. When all expenses have been paid, the trustee will divide the estate. The Insolvency Act 1986 sets out the order in which creditors will be paid (see preferential creditor). The bankruptcy may end automatically after two or three years, but in some cases a court order is required. The bankrupt is discharged and receives a certificate of discharge from the court.
Inability to pay debts. In bankruptcy of a publicly owned entity, the ownership of the firm's assets is transferred from the stockholders to the bondholders.
n. The state of a person who has been adjudged by a court to be insolvent (compare WINDING-UP). The court orders the compulsory administration of a bankrupt's affairs so that his assets can be fairly distributed among his creditors. To declare a debtor to be bankrupt a creditor or the debtor himself must make an application (known as a bankruptcy petition) either to the High Court or to a county court. If a creditor petitions, he must show that the debtor owes him at least ￡750 and that the debtor appears unable to pay it. The debtor's inability to pay can be shown either by:
(1) the creditor making a formal demand in a special statutory form, and the debtor failing to pay within three weeks;
or (2) the creditor of a judgment debtor being unsuccessful in enforcing payment of a judgment debt through the courts. If the petition is accepted the court makes a bankruptcy order. Within three weeks of the bankruptcy order, the debtor must usually submit a statement of affairs, which the creditors may inspect. This may be followed by a public examination of the debtor. After the bankruptcy order, the bankrupt's property is placed in the hands of the official receiver. The official receiver must either call a creditors' meeting to appoint a trustee in bankruptcy to manage the bankrupt's affairs, or he becomes trustee himself. The trustee must be a qualified insolvency practitioner. He takes possession of the bankrupt's property and, subject to certain rules, distributes it among the creditors.
A bankrupt is subject to certain disabilities (see UNDISCHARGED BANKRUPT). Bankruptcy is terminated when the court makes an order of discharge, but a bankrupt who has not previously been bankrupt within the preceding 15 years is automatically discharged after three years. See also VOLUNTARY ARRANGEMENT.
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- act of bankruptcy: [Business]noun [C] ...
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- the company is threatened with bankruptcy.
- the prospect of bankruptcy beetled over him.
- he repeatedly urged us to declare bankruptcy.
- overwhelmed by debt, he filed for bankruptcy.
- once again, bankruptcy was a real possibility.