8/24/2020 What is Bankruptcy?

INDUSTRY NEWS FASHION FEATURES

For Members Only: The U.P. Singing Doctor Dies These Pop Culture Bags Will This Giant Deep Sea Fish
Splashy Opening and Slow After Second Bout with Help Your Local Jeepney Washed Up Ashore After an
Collapse of the Playboy Club COVID-19 Driver Earthquake
in Manila

CAPITAL

What Exactly Does it Mean When a Company Files for

Bankruptcy?
And how is it different from insolvency?

By PAUL JOHN CAÑA   |   May 7, 2020

https://www.esquiremag.ph/money/capital/what-is-bankruptcy-a00289-20200507 1/7
8/24/2020 What is Bankruptcy?

712 Shares  Share  Tweet  Comments

Bankruptcy is increasingly becoming a familiar word while the planet grapples

with the coronavirus. With most people still being advised to stay home, and
businesses remaining shuttered because of lockdown orders from the
government, it’s becoming more and more dif cult for these businesses to stay
a oat and remain viable. 

While there are companies that have out-and-out shut down, others have
chosen to le for bankruptcy in an effort to save their businesses. The parent
company of Gold’s Gym in the US, and fashion retail brands J. Crew and True
Religion, for example, are just some of the companies that have declared
You May Like Sponsored Links
bankruptcy over the last few weeks.
Canada is looking for skilled
immigrants from Philippines. Apply
But even without a pandemic, bankruptcy isn’t an uncommon issue among now!
businesses. But what does it mean exactly? Canadian Visa Professionals

How To Watch American Net ix if You

Are Outside The US
What is bankruptcy? VPN Mentor

In its simplest terms, bankruptcy is a legal process that allows an individual or Check if you are eligible to participate
company to settle debts to creditors. Contrary to popular belief—or in the Australian Skilled Immigration
preconceived notions—declaring bankruptcy doesn’t automatically mean a program!
Australia Immigration Professionals
business or person is a failure. It just means that the debtor has taken it upon
Philippines: Work-From-Home In The
himself (or itself) to seek help in order to repay its debts and correct some bad US May Pay You More Than You Think!
decisions. Work Online USA | Search Ads

by Taboola

https://www.esquiremag.ph/money/capital/what-is-bankruptcy-a00289-20200507 2/7
8/24/2020 What is Bankruptcy?

ADVERTISEMENT - CONTINUE READING BELOW

ESQUIRE MONEY

Xurpas Stems Freefall in 1H 2020 But

Total Losses Swell to P3.5 Billion Since
2018

Solar Plants in Pampanga and

Zambales Coming from Ayala
Subsidiary
Often we hear of the phrase Chapter 11 bankruptcy, which takes its name from
the American bankruptcy code 11. Essentially it is a means for corporations to This Is How 8 Powerful and In uential
reorganize itself and follow a debt repayment strategy while still being allowed Men Work from Home

to continue to operate. In other words, when a company declares Chapter 11

bankruptcy, the debtor retains ownership and control of the company while it Financial Adviser: 5 Best Performing
Stocks with Year-to-Date Gains of Up
moves to negotiate and complete a payment plan.
to 52.3% and How to Pro t from Them

Is It Safe to Invest in Property During

CONTINUE READING BELOW
the COVID-19 Pandemic?

RECOMMENDED VIDEOS

MOST POPULAR

Too Much Sex Might Give Men Cancer.

So Can Masturbation. The World Sucks

Remastered Documentary of Ninoy’s

Final Days and Cory’s Last Interview
Can Now Be Streamed for Free

Palawan's Lakes Are Crystal Clear

Bankruptcy is often confused with insolvency, but the two words do not mean During the Pandemic

the same thing. According to Debt.org, it is possible for you to be insolvent but
not bankrupt, but it is not possible for you to be bankrupt without also being The New Toyota Corolla Cross Is the
Hybrid Crossover You've Been Waiting
insolvent. For

“Insolvency is the inability to pay debts when they are due,” Debt.org states. Is Ramon Ang Interested in Running
“Fortunately, there are solutions for resolving insolvency, including borrowing for Public O ce?

https://www.esquiremag.ph/money/capital/what-is-bankruptcy-a00289-20200507 3/7
8/24/2020 What is Bankruptcy?

money or increasing income so that you can pay off debt. You also could
negotiate a debt payment or settlement plan with creditors.

“Bankruptcy is usually a nal alternative when other attempts to clear debt

fail.”

In the Philippines, insolvency is the more widely accepted term for when a 'The moment you become selfish,
you do less.'-David Almirol Jr.
business is unable to pay its liabilities (cash ow insolvency) or have liabilities
The CEO of a flourishing Filipino software
that are much greater than its assets (balance sheet insolvency). company can tell you a thing or two about…

The equivalent law for bankruptcy and insolvency issues in the Philippines is
RA 10142 or the Financial Rehabilitation and Insolvency Act (FRIA). MOST SHARED

When a company declares itself to be insolvent, the law states that it can
choose two main courses of relief: either rehabilitation or liquidation.
(According to Val.law, for individual insolvent debtors, the law offers an
additional relief in the form of suspension of payments).

Rehabilitation, as de ned by FRIA, refers to the “restoration of the debtor to a

condition of successful operation and solvency.” The caveat here is that the 1 U.P. Singing Doctor Dies After
Second Bout with COVID-19
debtors must show that “its continuance of operation is economically feasible
and its creditors can recover by way of the present value of payments projected
in the plan, more if the debtor continues as a going concern than if it is 2 Is National Book Store Closing?
Here Is Their Statement
immediately liquidated.”

3 This Giant Deep Sea Fish Washed

Rehabilitation proceedings can either be court-supervised, pre-negotiated, or Up Ashore After an Earthquake
out-of-court or informal. Val.law states that the main difference between these
different types is the level of involvement of the courts over the rehabilitation
proceedings. #INTHELOOP
This Upscale
Liquidation, on the other hand, means exactly as the name suggests: stopping Makati Condo is a
operations of the company and bringing it to an end by selling off its assets to Paragon of
Sustainable Design
pay for its debts.
Here’s What Makes
Your Dog Extra
Special
It is called voluntary liquidation if the proceeding is led by the debtor, while it
is an involuntary liquidation if it is led by creditor. The Perks of Riding
for foodpanda,
According to 3
Bankruptcy or insolvency are terms that entrepreneurs or company owners and Pink-Shirted
Delivery Riders
executives would rather not hear and deal with, but they are realities in the
Why Resilience and
often ckle world of business, so it pays to at least have a basic grasp of their Nutrition Matter
Now, According to
meaning. COVID-19
Survivors

Korean Actress Son

712 Shares  Share  Tweet  Comments Ye Jin Makes A
Mark As The New
Face of Smart
Signature

https://www.esquiremag.ph/money/capital/what-is-bankruptcy-a00289-20200507 4/7
8/24/2020 What is Bankruptcy?

VIEW MORE ARTICLES ABOUT: CONNECT WITH US

Young Leader Esky Rookie EVERGREEN Bankruptcy    

Avelina Teodoro Story: Murderer at 16

Esquire

How Rich Is Chavit Singson?

Esquire

Canada is looking for skilled immigrants from Philippines. Apply now!

Canadian Visa Professionals

How To Watch American Net ix if You Are Outside The US

VPN Mentor

Check if you are eligible to participate in the Australian Skilled Immigration

program!
Australia Immigration Professionals

Philippines: Work-From-Home In The US May Pay You More Than You Think!
Work Online USA | Search Ads

The Most Handsome Men In Philippines On This Dating Site

Dating.com

New Anti-Mosquito Device Is Taking Philippines by Storm

Moskito Pro

Thousands of successful single men are looking for women from

Philippines
Dating.com | Sponsored

Boundless Net ix Streaming With These VPNs

TheTopFiveVPN | Sponsored

30 Wedding Photos That Went Horribly Wrong

Gloriousa

The 25 Richest Men Alive And Their Wives

Cleverst

https://www.esquiremag.ph/money/capital/what-is-bankruptcy-a00289-20200507 5/7
8/24/2020 What is Bankruptcy?

Play this Game for 1 Minute and see why everyone is addicted
Desert Order

Worst Rape and Murder Cases in the Philippines

Esquire

The Most Notorious Filipinos of All Time

Esquire

If you have a Mouse, you have to Play this Game. No Install.

Desert Order

Family Dog Grabs And Throws Baby, Mom Freezes Until She Learns Why
Bedtimez

Couple Decides To Make A Change and 18 Months Later, Their Lives Look
Completely Different
IcePop

The Rape of Gregoria de Jesus, Lakambini of the Katipunan

Esquire

"I am the son of a dead '80s bold star."

Esquire

Net ix Users - Access Hundreds of New Titles While Quarantine Using This Tool
TheTopFiveVPN

Do You Speak English? Work a USA job from home in Philippines

Work from Home | Search Ads

Philippines: Work-from-home jobs in the US may pay you more than you think
Work from Home in the US

20 Rare Jose Rizal Photos - Jose Rizal Pictures

Esquire

Rich and Famous Filipino Kids Schools - Top Rich Kids Schools
https://www.esquiremag.ph/money/capital/what-is-bankruptcy-a00289-20200507 6/7
8/24/2020 What is Bankruptcy?
Esquire

About The Author

Paul John Caña

Associate Editor, Esquire Philippines

View Other Articles From PJ

Get The Latest Updates From Esquire!

Subscribe to our newsletter!

Email address Sign Up

COMMENTS

0 Comments Sort by Oldest

Add a comment...

Facebook Comments Plugin

POLITICS CULTURE MONEY STYLE LONG READS

© EsquireMag.ph, All Rights Reserved. About Us Contact Us Terms of Use Privacy Policy Sitemap Subscribe

We use cookies to ensure you get the best experience on Esquiremag.ph. By continued use, you agree to our privacy policy and accept our use of such cookies. Find out more here.

I AGREE I DISAGREE

https://www.esquiremag.ph/money/capital/what-is-bankruptcy-a00289-20200507 7/7