voluntary bankruptcy
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Voluntary bankruptcy
The process where the debtor petitions the court for bankruptcy protection. Also see Involuntary bankruptcy.
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Voluntary Bankruptcy
A situation in which a debtor files for bankruptcy with a court. That is, no creditor forces the debtor into voluntary bankruptcy. A debtor may file for bankruptcy if it finds repaying its debts difficult or impossible. There are different kinds of voluntary bankruptcy. A company may file for liquidation, where a company ceases operations and sells its assets to repay creditors as far as possible. Likewise, a company may file a reorganization plan where some or all debts are forgiven and the company puts itself on a path toward solvency. See also: Chapter 7, Chapter 11, Chapter 13.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
voluntary bankruptcy
A bankruptcy initiated by the organization entering the bankruptcy rather than by that organization's creditors. Organizations generally enter voluntary bankruptcy to protect themselves from creditors' claims. Compare involuntary bankruptcy. See also Chapter 7, Chapter 11.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.