Owner and founder of Bankruptcy Debt Acquisitions, Jonathan Koop is a member in good standing of the receivables management industry. Jonathan Koop, through his company, uses his significant experience and a proprietary evaluation method to analyze and effectively liquidate bankrupt portfolios.
A common misconception surrounding bankruptcy is the idea that a company or entity needs to be insolvent to file for bankruptcy. However, these terms are not equivalent and the states or conditions need not coexist.
An insolvent entity is one that can’t comply with its financial obligations. The failure to honor those obligations can be due to a variety of reasons, and the entity is never required to file for bankruptcy.
On the other hand, an entity can choose to petition for bankruptcy to receive protection under the Bankruptcy Code if it is unable to meet its financial obligations. It’s important to note that almost all business entity types (corporations, partnerships, etc.) qualify for bankruptcy, and insolvency is not one of the requirements to do so.
A caveat is involuntary bankruptcy. Unsecured creditors can attempt to petition for the involuntary bankruptcy of a debtor if they can show the debtor is not honoring its debts when they are due.
Jonathan Koop 