For individuals, bankruptcy starts when the person is unable to pay a debt and the time for payment has lapsed. For corporations the standard is a little different. Corporations may file for bankruptcy when they are unable to pay, similar to a normal person, or when they are in a state of “balance sheet insolvency.” Balance sheet insolvency is when the corporation is unable to make payments even by selling its assets.
Proving that a debtor meets the requirements for bankruptcy is an important part of filing a bankruptcy petition. If you have further questions about bankruptcy and how it might affect your interests, please contact our office for a legal consultation.