BANKRUPTCY Flashcards
legal proceeding initiated when a person or
business is unable to repay outstanding debts or obligations.
BANKRUPTCY
begins with a petition filed by the debtor.
All of the debtor’s assets are measured and evaluated, and the
assets may be used to repay a portion of the outstanding debt.
Bankruptcy Process
Different from insolvency
BANKRUPTCY
TWO TYPES OF BANKRUPTCY
VOLUNTARY BANKRUPTCY
INVOLUNTARY BANKRUPTCY
A bankruptcy petition filed in federal
court
by
the
distressed
firm’s
management. [filed by the debtor]
Voluntary Bankruptcy
on the other
hand, is a bankruptcy case initiated by
a debtor’s creditors. [filed by the
company who lent money to the
borrower
INVOLUNTARY BANKRUPTCY
Reasons for Bankruptcy
Market Condition
Financials
Poor Decision Making
Poor Planning
Credit Problems
Job Loss
Unexpected Emergencies
How to Overcome and Avoid Bankruptcy?
Create Bare-bone budget
Seek for additional income
Make d
Sell non-essential assets
Financial Rehabilitation and Insolvency Act (FRIA) of 2010
RA 10142
An act providing for the rehabilitation or liquidation of
financially distressed enterprises and individuals
RA 10142
There are three types of rehabilitation, namely:
➢ Court-supervised rehabilitation
➢ Pre-negotiated rehabilitation; and
➢ Out-of-court/Formal Restructuring
is a state of financial distress in which a person or business is
unable to pay their debts.
INSOLVENCY
commonly used to assess the liability and asset of a
company.
Debt Ratio
when liabilities are greater than the value of the company,
or when a debtor cannot pay the debts they owe.
INSOLVENCY
A company can become insolvent due to a number of situations that
lead to ___________
poor cash flow.
