What is Bankruptcy?
an online resource for JoMC 050
Electronic Information Sources









go to: Information about Companies | Business Resources | Bankruptcy

The FAQs below were designed to help students quickly grasp the basics of bankruptcy
in the commercial realm, the differences among filing classes, and how the federal judiciary
adjudicates corporate bankruptcies.
The primary source for the information presented here is Findlaw.com

What is bankruptcy?
The administration of an insolvent debtor's property by the court for the benefit of the debtor's creditors

Note: Bankruptcy protects the debtor from debt collection by creditors. A debtor may file for bankruptcy, which is called "voluntary bankruptcy," or a creditor may petition the court to declare the debtor bankrupt, which is called "involuntary bankruptcy."' Involuntary bankruptcy is allowed only under chapter 7 or chapter 11 of the U.S. Bankruptcy Code. There are four types of relief available to individuals or corporations under the Bankruptcy Code: liquidation (chapter 7), reorganization (chapter 11), debt adjustment for a family farmer (chapter 12), and debt adjustment for an individual with a regular income (chapter 13). Municipalities may file for bankruptcy under chapter 9. Generally, not all debts are repaid in a bankruptcy. The court determines which debts are to be repaid according to their priority, and the debtor is typically granted a discharge from unpaid debts that are dischargeable under the Bankruptcy Code.

What is bankruptcy court?
Bankruptcy courts were created by Congress as part of the 1898 Bankruptcy Act. Article I, Section 8 of the U.S. Constitution gives Congress the power to establish "uniform laws on the subject of bankruptcies throughout the United States."

What is a bankruptcy trustee?
An officer of the court in whom ownership of a debtor's property is vested for the benefit of the creditors and who administers the property for the purpose of making payments to the creditors according to the priority of their claims.

What is Chapter 7 bankruptcy? Total liquidation and irrevocable closure of the business.
What is Chapter 11 bankruptcy? Reorganization, though filing Chapter 11 is sometimes used to liquidate. Chapter 11 gives trustees more leeway in controlling assets.
What is Chapter 13 bankruptcy? Personal bankruptcy, or the filing for individuals seeking court-regulated relief from creditors.

Where can I find out more? The Federal Judiciary, on the Web at http://www.uscourts.gov/.
The U.S. Courts system offers a bankruptcy primer at http://www.uscourts.gov/bankbasic.pdf.

 
 
 
go to: Information about Companies | Business Resources | Bankruptcy
This site was created for students of the UNC School of Journalism & Mass Communication's JOMC 050 Class. For more information, please contact: daikat@email.unc.edu.