Bankruptcy Proceedings Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Bankruptcy Proceedings, written in plain English, along with examples of how it is used.
What is Bankruptcy Proceedings?
(n) Bankruptcy Proceedings is process by which Court hear and decide on petitions from persons or business entities requesting them to be declared as bankrupt and examine and decide the request of refinancing, re-organizing, re-scheduling of the liabilities of such entity.
History and Meaning of Bankruptcy Proceedings
Bankruptcy proceedings have been around for centuries, with the first documented instances dating back to ancient Greece and Rome. In the United States, bankruptcy law has its roots in English common law, and the first federal bankruptcy law was passed in 1800. The goal of bankruptcy proceedings is to provide individuals and businesses with a way to discharge their debts and start fresh. Bankruptcy also helps to ensure that creditors are treated fairly and that assets are distributed in an orderly manner.
Bankruptcy proceedings can be initiated voluntarily by the debtor or involuntarily by the creditor. The process involves the filing of a petition in court, which is then reviewed by a bankruptcy trustee or judge. Depending on the type of bankruptcy being filed, the debtor may be required to sell off assets to pay off debts, or may enter into a repayment plan.
Examples of Bankruptcy Proceedings
- John filed for bankruptcy proceedings after losing his job and being unable to keep up with his debts.
- The company’s creditors initiated bankruptcy proceedings when it became clear that the business was no longer viable.
- After the bankruptcy proceedings were completed, Sarah was able to start fresh with a clean slate.
Legal Terms Similar to Bankruptcy Proceedings
- Liquidation - the process of selling off a debtor’s assets to pay off debts
- Chapter 11 - a chapter of the bankruptcy code that allows businesses to reorganize and continue operating under court supervision
- Creditor - a person or entity to whom money is owed