Voluntary Bankruptcy

See: Bankruptcy.

Like suicide for companies. Actually, in certain circumstances, it more closely resembles a hard reboot for a computer.

Companies (and people) get into financial trouble when liabilities outstrip assets. The firm (or person) owes more than it owns. At that point, bankruptcy becomes a distinct possibility.

Bankruptcy gives court protection from creditors. With a judge overseeing the process, everyone comes up with a plan to get the creditors everything possible. The company (or individual) then gets a chance to rebuild.

For companies, the bankruptcy might involve liquidation, which means the end of the firm. Or it might restructure and emerge from bankruptcy intact (the hard reboot option). A voluntary bankruptcy happens when the company (or individual) files the paperwork on their own. They start the process. It stands opposed to an involuntary bankruptcy, where the creditors file legal action to force the bankruptcy to happen.