It is the situation in which an individual or legal entity finds itself when it is unable to meet the payments it must make to its creditors.
The legal declaration of bankruptcy implies that the company ceases its activity and enters into an arrangement with creditors, in which it is determined whether the bankrupt's assets are sufficient to meet its obligations. The bankrupt's assets are liquidated to meet its debts.
During the bankruptcy process, creditors cannot take legal actions individually against the debtor.
Bankruptcies are classified as fortuitous, culpable or fraudulent.