Bankruptcy

How it is used

Used in credit, collections and legal teams. A company files for bankruptcy, goes bankrupt or is declared bankrupt. In the US, Chapter 11 lets a company reorganise and keep operating, while Chapter 7 means liquidation. For companies, British English often uses 'insolvency', 'administration' and 'liquidation'.

Example sentences

1. Two of our largest borrowers in the sector filed for bankruptcy this year.

2. In bankruptcy, secured creditors are paid before unsecured ones.

Common collocations

• file for bankruptcy
• go bankrupt
• bankruptcy proceedings
• declare bankruptcy
• personal bankruptcy

Related terms

• defaultFailure to make loan or bond payments as agreed. A borrower is usually treated as in default after missing payments for a set period, often 90 days.
• restructuringChanging the terms of a loan, such as the maturity, instalments or interest, because the borrower has difficulty paying; also the reorganisation of a whole company.
• collateralAn asset, such as property, cash or securities, that a borrower pledges to a lender and that the lender can sell if the loan is not repaid.
• write offTo remove a debt or asset from the accounts because it has no value or will not be recovered, and record the amount as a loss.
• non-performing loanA loan on which the borrower has stopped making payments, usually for 90 days or more, or which is unlikely to be repaid in full.

More terms: Corporate Finance

• cash flow
• capital
• working capital
• leverage
• dividend
• bond
• valuation
• M&A
• IPO
• due diligence
• shareholder
• raise capital