Involuntary Bankruptcy

AAA

DEFINITION of 'Involuntary Bankruptcy'

A legal proceeding in which a person or business is requested to go into bankruptcy by creditors, rather than on the person or business' own accord. Creditors seeking involuntary bankruptcy must petition the court to initiate the proceedings, and the indebted party can file an objection to force a case.

INVESTOPEDIA EXPLAINS 'Involuntary Bankruptcy'

Involuntary bankruptcy is requested by creditors who feel that they will not be paid if bankruptcy proceedings are not entered into, and seek a legal requirement to force the debtor to pay. In order for involuntary bankruptcy to be brought forward, the debtor must have a certain amount of debt that must be met. This amount depends on whether the debtor is an individual or a business.

RELATED TERMS
  1. Chapter 11

    Named after the U.S. bankruptcy code 11, Chapter 11 is a form ...
  2. Chapter 13

    A U.S. bankruptcy proceeding in which the debtor undertakes a ...
  3. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  4. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  5. Discharge In Bankruptcy

    A permanent order that releases the debtor from personal liability ...
  6. 341 Meeting

    The meeting of creditors that occurs when an individual files ...
RELATED FAQS
  1. What role did junk bonds play in the financial crisis of 2007-08?

    Junk bonds were the at heart of the financial crisis of 2007-2008. Toxic assets related to the subprime housing market pushed ... Read Full Answer >>
  2. How important are fleet sales to an automaker's business?

    Fleet sales have been turning much more profitable with the recovery of the auto industry since the financial crisis of 2 ... Read Full Answer >>
  3. What role did securitization play in the U.S. subprime mortgage crisis?

    The securitization of subprime mortgages into mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) ... Read Full Answer >>
  4. What types of companies are in the automotive sector besides auto manufacturers?

    The automotive sector includes several types of companies besides auto manufacturers. Some of these companies focus on the ... Read Full Answer >>
  5. How should fixed-income investors prepare for a bear market?

    Fixed-income investors should prepare for a bear market by reducing exposure to instruments that are riskier and increasing ... Read Full Answer >>
  6. What techniques are most useful for hedging exposure to the drugs sector?

    Useful techniques for hedging exposure to the drugs sector include investing in stable, non-cyclical sectors that do not ... Read Full Answer >>
Related Articles
  1. Home & Auto

    From Booms To Bailouts: The Banking Crisis Of The 1980s

    The economic environment of the late 1970s and early 1980s created the perfect storm for a banking crisis.
  2. Retirement

    Bankruptcy Protection For Your Accounts

    Will the plan assets you've worked hard for be safe if you experience a personal financial crisis?
  3. Insurance

    Life After Bankruptcy

    Find out what you have to look forward to after filing for Chapter 7 or 13.
  4. Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

    If a company files for bankruptcy, stockholders have the most to lose. Find out why.
  5. Retirement

    What You Need To Know About Bankruptcy

    Don't choose this last-resort option until you learn how it will affect your future.
  6. Economics

    Understanding Subordinated Debt

    A loan or security that ranks below other loans or securities with regard to claims on assets or earnings.
  7. Trading Strategies

    Rules and Strategies For Profitable Short Selling

    Short sales work well in bull and bear markets but strict entry and risk management rules are required to overcome the threat of short squeezes.
  8. Economics

    Worried About The Fed Hike?

    With the Nasdaq crossing the threshold and the broader equity bull market entering its 7th year, many investors are anxious that stocks are in a bubble.
  9. Stock Analysis

    5 Reasons Sirius XM Haters Are Gone

    Bears continue to clear out of Sirius XM Holdings. There were fewer than 146 million of its shares sold short by the end of February.
  10. Stock Analysis

    Will American Airlines Fall Back To Earth In 2015?

    The airline industry enjoys blockbuster profits, and American Airlines Group has been a key beneficiary of the favorable trends that have lifted stocks.

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center