Can A Company Without Debt Go Bankrupt?
Can a company without debt go bankrupt? Min Austria Assistant at Ascent Law LLC It can seem like an oxymoron to say that a company without debt can go bankrupt. After all, if you don't owe anyone money, then you can't default on your debts and fail to pay your creditors—so how could you ever run into financial trouble? It's important to remember that bankruptcy is a legal status, not just a simple matter of non-payment. Banks and other businesses (excluding partnerships) have the option of filing for Chapter 7 bankruptcy, which means liquidating their assets in order to pay off their liabilities. So even a company with no debt can file for bankruptcy if it decides that it's the best way to deal with its situation. The short answer is yes; a company without debt can go bankrupt. However, it is much more likely that this company will go into receivership rather than bankruptcy. In some cases, the owners are not willing to give up control of the company and they therefore ...