Every business owner needs to know the difference between insolvency and bankruptcy. Often these two terms are misunderstood and improperly used in conversation. You need to know their correct meaning because both are used in civil law and both have different issues to address during the process. In addition, understanding these two terms builds a better comprehensive understanding of financing your business.
Chapter 7 is a federal bankruptcy court process to formally liquidate the assets of the business and pay the creditors their respective share of the proceeds. Chapter 7 terminates the business operation.