Bankruptcy Law
Declaring bankruptcy and the implications thereof
Bankruptcy is the legal term for the plight of any business or person that is unable to continue under their current state of finance. To declare bankruptcy is a formal recognition of insufficient funds needed to pay creditors.
Common causes of bankruptcy are living beyond one's means, changes in circumstances or market conditions, and business failure.
There are different forms and stages of bankruptcy and the preliminary process, as listed below:
Involuntary bankruptcy
Involuntary bankruptcy can be forced upon any business or single person, by any creditor wishing to initiate restructuring or claim entitlement. Bankruptcy in this form may not be filed against a single debtor who is not actively involved within the business, but instead a business as a whole or an active owner individual.
This area of law covers:
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the avoidance of involuntary bankruptcy
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the requirements for an official complaint to be filed
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legitimate reasons behind enforcing involuntary bankruptcy
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the benefits of involuntary bankruptcy.
Voluntary bankruptcy
Primarily bankruptcy is voluntary, initiated directly by the debtor, and filed by the insolvent individual or organisation; this is known as voluntary bankruptcy. To ensure fair use of bankruptcy claims the law regulates guidelines on the following areas:
Administration
An alternative to liquidation, administration is a process under the insolvency laws of a number of common law controls. Acting as a last resort rescue device for insolvent companies. The procedure allows a business to continue functioning whilst operated by the Administrator (as interim Chief Executive) whilst exploring financial resolutions i.e. recapitalising, selling, dissolution.
Offering support and guidance through a temporary takeover of operations, administration is a popular measure when a company or organisation is at threat of bankruptcy. Bankruptcy law covers areas of administration with regulations and guidance regarding:
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seeking administration takeover measures
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working with an interim chief executive to explore resolutions
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relationship management with your interim chief executive.
Liquidation
Liquidation can often be a result of bankruptcy. When bankruptcy reaches its final stages and no other available alternatives are viable, liquidation is sought. The closing of a business and the division of assets as a result of acquired debts is described as liquidation, which is also commonly known as dissolution, although technically referring to liquidations final stage. Bankruptcy laws sections on liquidation explore areas of:
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Living with bankruptcy
Bankruptcy is the legal status that a person or organisation enters into when it can no longer pay its debts and honour its obligations to its creditors.
Bankruptcy solicitors
Facing bankruptcy can be a frightening experience. There are many complications involved that may leave you feeling confused and not knowing where to turn. Having a solicitor to guide you through the process can bear huge benefits.
Declaring yourself bankrupt
When an individual realises that they are about to go, or perhaps have already gone, bankrupt it can be hard to know where to go or what to do.