Bankruptcy is the financial and legal result of failure to pay off outstanding debts by a person or an organization. It has become very common all over the world because of rapid economic growth and the problems caused by this. In recent years, huge corporate bankruptcies have been witnessed, such as the Lehman Brothers bankruptcy filing on September 15, 2008, with $639 billion in assets and $619 billion in debt. Policy makers have tried to find the best way to overcome the serious economic problems caused by the increasing number of bankruptcies. While the United States has adopted reforms designed to limit access to bankruptcy procedures, the United Kingdom and Japan have implemented reforms to encourage more filings.

The terms bankruptcy and insolvency are often confused, ...

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