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.