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Presentation onPresentation on

By:Abhinav Sharma

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Bankruptcy:Bankruptcy:y Bankruptcy is a legally declared inability

or impairment of ability of an individualor organization to pay its creditors.

y It is a court proceeding that may allow aperson with large debts to get a freshstart by freeing them from many or all of

their debts.

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y It can also benefit creditors by providingfor an orderly means by which they maybe paid all, or a portion of what they areowed, either through liquidation of the

debtor s property or through a court-approved repayment plan.

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Wh en is a company bankrupt?Wh en is a company bankrupt?

D ifferent countries and jurisdictions havedifferent legal definitions of bankruptcy for acorporation, but most countries employ one or

a combination of the following:y Cash flow bankruptcy , where a corporation is

unable to pay its debts as they fall due.y Balance sheet bankruptcy , where the

corporation's assets are worth less than itsliabilities.

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y Technical bankruptcy , where a corporation isdeemed to be bankrupt regardless of its truefinancial position. The state of a company orperson who has defaulted on a financialobligation and would be declared bankrupt if

the creditor makes a claim through the courts.

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C reditors may file a bankruptcy petition against

a business or corporate debtor ("involuntarybankruptcy") in an effort to recoup a portion of what they are owed. In the majority of cases,however, bankruptcy is initiated by the debtor

(a "voluntary bankruptcy that is filed by theinsolvent, individual or organization).

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M odern insolvency legislation and debtM odern insolvency legislation and debtrestructuring practices:restructuring practices:The principal focus of modern insolvencylegislation and business debt restructuringpractices no longer rests on the elimination of

insolvent entities but on the remodeling of thefinancial and organizational structure of debtorsexperiencing financial distress, so as to permitthe rehabilitation and continuation of their

business.

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Bankruptcy in individual countries:Bankruptcy in individual countries:

Australia:The B ankruptcy Act 1966, is thelegislation that governs bankruptcy in

Australia. Only individuals can becomebankrupt; insolvent companies go intoliquidation or administration.

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B razil:In Brazil, the Bankruptcy Law (11,101/05)disciplines Bankruptcy and, it is only applicableto private companies, except for financialinstitutions, credit cooperatives, societiesoperating health care plan, society of capitalization and other entities legally treatedas issues. This is not applicable to publiccompanies.

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U nited Kingdom:In the United Kingdom, bankruptcy (in astrict legal sense) relates only toindividuals and partnerships. C ompanies

and other corporations enter intodifferently-named legal insolvencyprocedures:

Liquidation and Administration.

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U nited States :Bankruptcy in the United States is a matterplaced under Federal jurisdiction by the UnitedStates C onstitution (in Article 1, Section 8,C lause 4), which allows C ongress to enact

uniform laws on the subject of bankruptciesthroughout the United States.

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India:India does not have a clear law on corporatebankruptcy even though individual bankruptcylaws have been in existence since 1874. Thecurrent law in force was enacted in 1920 calledProvincial Insolvency Act which consists of C hapter 7 and chapter 13 bankruptcies.

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y Under C hapter 7 (Liquidation), the bankruptcytrustee collects your non-exempt property, sells itand distributes the proceeds to your creditors.Your remaining debt is discharged, allowing you tohave a fresh start, debt free.

y C hapter 13 (Reorganization), filing allows you tocreate a plan to use future earnings to pay off debt. The repayment plan can take 5 years andmay not pay 100% of your debt.

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Thank You

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