Bankruptcy may not always mean the termination of a business as it can offer an entrepreneur an option to reorganize under Debt payment or merge with another company.
A person or other entity that cannot pay their debts to creditors may seek relief from part or all of their debts via the legal procedure known as bankruptcy. Most commonly, the debtor initiates a court order requiring bankruptcy before it can be implemented. The term "bankruptcy" is not a synonym for "insolvency" because there are other legal statuses that an individual who is insolvent may hold.
The earliest English law act addressing bankruptcy or insolvency was the Statute of Bankrupts of 1542. East Asia has an established history of bankruptcy. Al-Maqrizi said that a clause in the Yassa of Genghis Khan called for the death sentence for anybody who went bankrupt three times.
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