Bankruptcy – n : legal term, popularly defined as insolvency. Technically, bankruptcy is a legal process put in place to insure fair and equal treatment of creditors of an insolvent company, and also to protect the insolvent debtor to get started again by retaining assets that are protected from liability. Chapter 11 bankruptcy is voluntary, meaning that the debtor chooses to reorganize and restructure in order to repay debts. Chapter 7, or involuntary bankruptcy, involves the shutting down and liquidation of a business in order to repay creditors.

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Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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