bankruptcy

Vocabulary Word

Definition

'Bankruptcy' is a formal state of being unable to meet debt obligations. It usually involves a legal process, which can result in forgiving some or all debts or creating a repayment plan.

Examples in Different Contexts

In corporate finance, 'bankruptcy' is a crucial concept detailing a company's inability to meet financial obligations. A CEO might announce, 'We are exploring all options to avoid bankruptcy and ensure the company’s survival.'

Practice Scenarios

Business

Scenario:

With this level of losses, it won't be sustainable for us to continue operating. We need to discuss our options.

Response:

Considering its financial position, the company must contemplate bankruptcy to free itself from the debt burden.

Economics

Scenario:

The current rise in defaults indicates an economic distress in the community. We must investigate the implications for the broader economic climate.

Response:

The rising bankruptcy rate needs immediate addressal as it could trigger a full-blown economic crisis.