What causes a person or individual to go bankrupt? There is one very possible reason that is usually the common explanation for bankruptcy: the person is unable to pay his debts. However, the very reason as to why he is unable to pay would be another story. On the other hand, a company or an organization could also go bankrupt. And just like a person or individual going bankrupt, the reason behind a companys bankruptcy could be because of its inability to pay its bills and other financial obligations. What could be the reasons why these business groups could not pay? There are various answers to this question. It could be due to very low profits. It could also be because of the wrong kind of leadership in the company or organization itself. It could be because of misallocation of its resources and funds. The reason could also be that there are not enough clients or that the company or organizations line of business is not catching the attention and interest of consumers. When a company or organization has already filed for bankruptcy in court, they are then given bankruptcy protection. Bankruptcy protection provides these companies or organizations a chance to start anew. However, these groups are still given the responsibility of paying their creditors. Of course, when a company or an organization files for bankruptcy, they have their minds set on restructuring. They could then use Chapter 10 bankruptcy to assist them in this situation. Under Chapter 10, bankrupt companies could have the chance to reorganize and restructure. However, there would be a court-appointed manager to assist the company. This court-appointed manager is also called a trustee. What this trustee does is primarily oversee the whole reorganization process. The trustee would serve as the mediator between the company and the court. He would also see to it that any plans regarding the reorganization would be strictly followed. |
