Legal bankruptcy
A legal proceeding for liquidating or reorganizing a business. |
Similar financial terms
Legal investmentsInvestments that a regulated entity is permitted to make under the rules and regulations that govern its investing.
Legal defeasance
The deposit of cash and permitted securities, as specified in the bond indenture, into an irrevocable trust sufficient to enable the issuer to discharge fully its obligations under the bond indenture.
Legal capital
Value at which a company's shares are recorded in its books.
Mutual Legal Assistance Treaty (MLAT)
An agreement among the U.S. and many Caribbean countries for the exchange of information for the enforcement of criminal laws. U.S. tax evasion is excluded as not being a crime to the offshore countries. The British Virgin Islands have not executed the Treaty.
Prepackaged bankruptcy
A bankruptcy in which a debtor and its creditors pre-negotiate a plan or reorganization and then file it along with the bankruptcy petition.
Bankruptcy
State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from the stockholders to the bondholders.
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt finaning.
Bankruptcy risk
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
Bankruptcy view
The argument that expected bankruptcy costs preclude firms from being financed entirely with debt.
