May 19 2025 |
Reasons for company bankruptcies
There are numerous reasons why a company might initiate bankruptcy proceedings, including:
- Poor cash flow
- Insurmountable debts
- Difficult market conditions
- Lack of funding
- Negligent or criminal behavior
- “Acts of God” and unforeseen disasters
Generally speaking, organizations undertaking bankruptcy proceedings will be in financial distress or experiencing insolvency . The first four reasons listed above are common problems for businesses in a nationwide or global recession.
See also: Recession Readiness Hub
Types of corporate bankruptcy
According to the US Bankruptcy Code, there are two main types of corporate bankruptcy:
- Liquidation bankruptcy (chapter 7)
- Reorganization bankruptcy (chapter 11)
Chapter 7 bankruptcy
This type of bankruptcy is known as a “straight bankruptcy” and is the process of liquidating (selling off) the organization’s non-exempt assets in order to pay creditors.
Learn more: Chapter 7 Corporate Bankruptcy
Chapter 11 bankruptcy
This chapter provides an alternative solution to liquidation for insolvent companies. A chapter 11 bankruptcy allows the organization to remain trading while continuing to pay its debts. A chapter 11 petition may be voluntary (filed by the debtor) or involuntary (filed by creditors).
Learn more: Chapter 11 Corporate Bankruptcy
How Ansarada can help
Every day we help thousands of businesses get ready for and experience success in capital raising, M&A, re-financing, restructuring, post-acquisition integration, tenders and more.
With over fifteen years of experience on 24,000+ critical deals and over $1 trillion in deal value transacted on our platform, your bankruptcy preparation, liquidation or restructure couldn’t be in safer hands.
Facilitated bankruptcy Workflow
Take back control. Initiate your business bankruptcy proceedings with clarity and confidence. Use Ansarada’s Workflow tool to get total oversight of financial performance. Analyze your business’ greatest threats efficiently and in depth. Understand your next steps, feel guided, and reassured. All features are completely free to use until you execute a deal.
Secure collaboration & data sharing
Collaborate with creditors, Directors, insolvency practitioners, and other interested parties using clear and up-to-date information, with no dispute or confusion as to data sources. Remove the stress and uncertainty of spreadsheets; bankruptcy is stressful enough.
Streamlined deal execution
Ansarada facilitates insolvency and bankruptcy proceedings with the world’s most advanced Virtual Data Rooms , bank grade security, Q&A features and streamlined Workflows . Our platform has helped turnaround some of the world’s most famous businesses, including Virgin Australia and Europoles .
