Bankrupt

Business, Legal & Accounting Glossary

Definition: Bankrupt


Quick Summary of Bankrupt


(of a person or organization) declared in law unable to pay outstanding debts.



Full Definition of Bankrupt


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.


Cite Term


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.

Page URL
https://payrollheaven.com/define/bankrupt/
Modern Language Association (MLA):
Bankrupt. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. November 30, 2020 https://payrollheaven.com/define/bankrupt/.
Chicago Manual of Style (CMS):
Bankrupt. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/bankrupt/ (accessed: November 30, 2020).
American Psychological Association (APA):
Bankrupt. PayrollHeaven.com. Retrieved November 30, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/bankrupt/

Definition Sources


Definitions for Bankrupt are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 15th February, 2020 | 3 Views.