UK Accounting Glossary
(of a person or organization) declared in law unable to pay outstanding debts.
To be bankrupt is to be insolvent, or in bankruptcy.
In law, bankruptcy is the term for a state of insolvency declared by a court, but in common usage, bankrupt status could be either de facto or de jure. A firm can become bankrupt even with considerable profit through improper asset-liability management, or not having the cash flow to pay bills when they come due. Thus, an accountant would say that the number one reason a business would become bankrupt is a lack of cash. An individual can be bankrupt, too. A bankrupt individual can discharge debts in Chapter 7 bankruptcy, or repay the debts (but keep all assets) in a Chapter 13 bankruptcy. Chapter 7 also applies for a bankrupt company that is liquidating. A bankrupt company that is going to restructure its debts and attempt to continue as a going concern would instead use either Chapter 10 or Chapter 11. Under Chapter 10, a bankrupt company reorganizes with a court-appointed manager; under Chapter 11, the existing management is retained during reorganization.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Bankrupt are sourced/syndicated and enhanced from:
This glossary post was last updated: 4th February 2020.