1. Definition

Bankruptcy is the state in which an individual or business is unable to pay its debts and meet its financial obligations. Bankruptcy is typically managed through a legal process, where a court reviews the assets of the affected party and settles debts as far as possible.

2. Applications in Industry

In industry, bankruptcy often occurs when a company is unable to meet its liabilities due to financial difficulties. Bankruptcies are common among companies that are over-indebted or in an economic crisis. Bankruptcy can lead to the restructuring or liquidation of the business, with significant implications for creditors and employees alike.

3.Types of Bankruptcy

A. Insolvency Proceedings

Insolvency proceedings are legal processes in which a debtor's assets are systematically distributed among creditors. Companies can either be restructured or liquidated to settle debts as much as possible.

B.  Chapter 11 Bankruptcy (USA)

In the USA, Chapter 11 allows businesses to continue operations during restructuring to regain financial stability. It provides a way to restructure without completely ceasing operations.

C. Personal Bankruptcy 

Personal bankruptcy is a process that allows individuals to reduce or eliminate debt. It may involve selling certain assets, but it also offers a path to financial recovery.

D. Liquidation 

Liquidation is the complete dissolution of a company, where all assets are sold and proceeds are used to settle debts. This is usually the last option when restructuring is not feasible.