BANKRUPTCY
bankruptcy. 1. A statutory procedure by which a (usu. insolvent) debtor obtains financial relief and undergoes a judicially supervised reorganization or liquidation of the debtor’s assets for the benefit of creditors; a case under the Bankruptcy Code (Title 11 of the United States Code). • For various types of bankruptcy under federal law, see the entries at CHAPTER. — Also termed bankruptcy proceeding; bankruptcy case; insolvency proceeding. [Cases: Bankruptcy 2001.
C.J.S. Bankruptcy § 2.]
“There are two general forms of bankruptcy: (1) liquidation and (2) rehabilitation. Chapter 7 of the Code is entitled ‘Liquidation.’ The terms ‘straight bankruptcy’ and ‘bankruptcy’ often are used to describe liquidation cases under the bankruptcy laws because the vast majority of bankruptcy cases are liquidation cases. In a typical Chapter 7 liquidation case, the trustee collects the nonexempt property of the debtor, converts that property to cash, and distributes the cash to the creditors. The debtor gives up all the nonexempt property she owns at the time of the filing of the bankruptcy petition and hopes to obtain a discharge. Chapters 11, 12, and 13 of the Bankruptcy Code contemplate debtor rehabilitation. In a rehabilitation case, creditors look to future earnings of the debtor, not to the property of the debtor at the time of the initiation of the bankruptcy proceeding, to satisfy their claims. The debtor generally retains its assets and makes payments to creditors, usually from postpetition earnings, pursuant to a court-approved plan.” David G. Epstein et al., Bankruptcy § 1-5, at 8–9 (1993).
family-farmer bankruptcy.See CHAPTER12 (2).
farmer bankruptcy.See CHAPTER12 (2).
involuntary bankruptcy.A bankruptcy case commenced by the debtor’s creditors (usu. three or more), or, if the debtor is a partnership, by fewer than all the general partners. 11 USCA § 303(b).
— Also termed involuntary proceeding. [Cases: Bankruptcy 2281. C.J.S. Bankruptcy § 56.] liquidation bankruptcy.See CHAPTER7 (2).
malicious bankruptcy.An abuse of process by which a person wrongfully petitions to have another person adjudicated a bankrupt or to have a company wound up as insolvent. [Cases:
Bankruptcy 2187. C.J.S. Bankruptcy §§ 36, 64.] straight bankruptcy.See CHAPTER7 (2).
voluntary bankruptcy.A bankruptcy case commenced by the debtor. 11 USCA § 301. [Cases: Bankruptcy 2251. C.J.S. Bankruptcy § 50.]
- The field of law dealing with the rights of debtors who are financially unable to pay their debts and the rights of their creditors. — Also termed bankruptcy law. 3. The status of a party who has declared bankruptcy under a bankruptcy statute. — Also termed statutory insolvency. 4. Informally, the fact of being financially unable to pay one’s debts and obligations as they become due; insolvency. • The roots of bankruptcy are the Latin bancus (table) and ruptus (broken). The English word bankruptcy derives from the Italian banca rotta, referring to the medieval Italian custom of breaking the counter of a financially failed merchant. — Also termed (in sense 4) failure to meet obligations.[Blacks Law 8th]