Bankruptcy

Bankruptcy is a legal process in which an individual or business is unable to pay their debts. It is a way for debtors to have their debt restructured or eliminated, so that they can have a fresh start financially.

For example, a debtor may file for bankruptcy if they have accumulated debt beyond their ability to repay and can no longer meet their obligations. The debt is then restructured or discharged, giving the debtor a new beginning.

One of the most significant bankruptcies was in 2008 during the global financial crisis, when financial services firm Lehman Brothers reported more than $600 billion in debt and $639 billion in assets.

The bankruptcy had significant ripple effects throughout the global financial system, causing a severe liquidity crisis and prompting a number of other financial institutions to seek government bailouts.