Glossary

Bankruptcy is a legal process in which an individual or business declares the inability to repay outstanding debts.

Bankruptcy offers debt relief to the debtor, either through liquidation or reorganisation. In liquidation, the debtor's assets are sold to pay off creditors, while reorganisation allows the debtor to restructure debt and make a new plan for repayment. Bankruptcy can provide a fresh start, but it often has long-lasting consequences on credit scores and future financial opportunities. 💸📉

For example, the American airline company Delta filed for Chapter 11 bankruptcy protection in 2005, later emerging from bankruptcy in 2007 after a successful reorganisation.

Fun fact: One of the largest corporate bankruptcies in history was that of Lehman Brothers, an investment bank whose collapse in 2008 played a significant role in the global financial crisis. At the time of its bankruptcy filing, Lehman Brothers held over $600 billion in assets. 😱🏦