Act of Bankruptcy


Also found in: Dictionary, Legal, Wikipedia.

Act of Bankruptcy

An action by a debtor that can be a basis for creditors to file a bankruptcy petition against the debtor. Examples of such actions are concealing assets, defrauding creditors, favoring one creditor over another, or admitting in written a willingness to be adjudged bankrupt.

Act of Bankruptcy

An involuntary admission of bankruptcy by a debtor. In general, going into default and consistently missing payments may be considered acts of bankruptcy. Before 1978 in the United States, an act of bankruptcy involved the transfer of assets to another party with the intent to defraud creditors, but this is no longer the case. Upon committing an act of bankruptcy, creditors have the ability to petition to force the debtor into legal bankruptcy.
References in periodicals archive ?
A petition may be filed for a Receiving Order against a debtor if the debt owing to the petitioning creditor is one thousand dollars or more and the debtor has committed an act of bankruptcy, as defined in the BIA, within six months of the filing of the petition with the Court.
The practical effect of establishing an act of bankruptcy was proving the debtor's insolvency.