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LegalCornerTM - Business Bankruptcy - Chapter 7 or 11 F.A.Q.'s

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Q.What is corporate insolvency and winding up?

A.Unlike the sole proprietorship which is merely the alter-ego of the owner, a corporation is a legal entity separate and apart from its directors and shareholders. When a corporation cannot pay its debt as and when it falls due, a corporation is insolvent. A corporation that is insolvent may opt to liquidate (declare Chapter 7 bankruptcy) or go through a reorganization (decalre Chapter 11 bankruptcy).

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