INSOLVENCY AND BANKRUPCY Flashcards
1
Q
Insolvency
A
A financial state where a person or firm cannot meet their debt payments on time. Their debts exceed their assets. One of the most common solutions is declaring bankruptcy.
Economic distress.
2
Q
Bankruptcy
A
A legal process that happens when an entity (person or firm) declares that they can no longer pay their debts to creditors.
Legal process for liquidating the property and assets the debtor owes. This process can provide protection and relief.
Usually leads to a court order dictating how debts will be covered.
