Field FL

How a Bankruptcy petition brought in?

A business bankruptcy petition can be filed voluntarily or involuntarily. When the debtor firm files a bankruptcy petition, this is called voluntary. If the creditor firm initiates business bankruptcy filing, it is called involuntary proceeding. The court can accept or reject either of the petitions. If accepted, in either case, the filing results in a stay order that bars the creditors from taking any further collection actions. As per US Bankruptcy Reform Act of 1978,  three or more creditors with unsecured claims totaling $ 12,300 or more are required to initiate involuntary bankruptcy subject to establishing evidence that the debtor is equitable, i.e., the debtor had failed to pay dues in time. When the court accepts the petition, a stay order is issued on creditors’ collection actions for a permanent solution to be decided by the court. The court may also dismiss the petition.