BANKRUPTCY - Black's Law Dictionary

The state or condition of one who is a bankrupt; amenability to the bankrupt laws; the condition of one who has committed an act of bankruptcy, and is liable to be proceeded against by his creditors therefor, or of one whose circumstances are such that he is entitled, on his voluntary application, to take the benefit of the bankrupt laws.

The term is used in a looser sense as synonymous with "insolvency,"—inability to pay one's debts; the stopping and breaking up of business because the trader is broken down, insolvent, ruined. Phipps v. Harding, C.C.A.Wis., 70 Fed. 468, 17 C.C.A. 203, 30 L.R.A. 513.

It constitutes a branch of equity jurisprudence. In re Flour Mills of America, D.C.Mo., 27 F.Supp. 559, 560. Its purpose is to secure finally to creditors distribution of value of at least part of debtor's assets and to bankrupt discharge from his debts, to end that creditors may be paid as much as may be and that bankrupt may have new start in life. In re Jones, D.C.Mo., 10 F.Supp. 165, 167.

Insolvency means a simple inability to pay as debts should become payable, whereby the debtor's business would be broken up; bankruptcy means the particular legal status, to be ascertained and declared by a judicial decree. In re Black, 2 Ben. 196, Fed.Cas.No.1,457.

The proceedings taken under the bankrupt law, against a person (or firm or company) to have

him adjudged a bankrupt, and to have his estate administered for the benefit of the creditors, and divided among them. That branch of jurisprudence, or system of law and practice, which is concerned with the definition and ascertainment of acts of bankruptcy and the administration of bankrupts' estates for the benefit of their creditors and the absolution and restitution of bankrupts.

Act of Bankruptcy. See Act.

Adjudication of Bankruptcy

The judgment or decree of a court having jurisdiction, that a person against whom a petition in bankruptcy has been filed, or who has filed his voluntary petition, be ordered and adjudged to be a bankrupt.

Bankruptcy Courts. Courts for the administration of the bankrupt laws.

Bankruptcy Proceedings

This term includes all proceedings in a federal court having jurisdiction in bankruptcy, founded on a petition in bankruptcy and either directly or collaterally involved in the adjudication and discharge of the bankrupt and the collection and administration of his estate. Kidder v. Horrobin, 72 N.Y. 167. See, also, Proceedings in bankruptcy. Steps in administration of estate in bar kruptcy court within summary jurisdiction of bankruptcy court. (Bankr.Act, § 24a, b, 11 U.S.C.A. § 47(a) (b). Childs v. Ultramares Corporation, C.C.A. N.Y., 40 F.2d 474, 477.

Controversies Arising in Bankruptcy Proceedings. See Proceedings in bankruptcy.

Extension. See Extension.

Involuntary Bankruptcy. See Voluntary bankruptcy, infra.

Voluntary Bankruptcy

Bankruptcy (in the sense of proceedings taken under the bankruptcy law) is either voluntary or involuntary; the former where the proceeding is initiated by the debtor's own petition to be adjudged a bankrupt and have the benefit of the law. In re Murray, D.C.Iowa, 96 F. 600; Metsker v.Bonebrake, 2 Sup.Ct. 351, 108 U.S. 66, 27 L.Ed. 654, the latter where he is forced into bankruptcy on the petition of a sufficient number of his credi- tors.

See Bankrupt; Bankrupt Law.

Bankruptcy Rule

Allows claim only for amount of debt, less value of security. In re Baker, 333 Pa. 273, 3 A.2d 785, 786.

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