History of the bankruptcy law

business bankruptcy can be defined as the inability or impairment of a business or individuals to pay their creditors. There are several types of bankruptcy; the most common of which is the involuntary bankruptcy where the creditors file a bankruptcy petition against the debtors. The aim is usually to recoup a portion or all they are owed by the business. In some cases, the aim is not as much as to recover the money owed as it is to initiate a restructuring of the company.

Another bankruptcy type is normally initiated by the debtor in which case it is called a voluntary bankruptcy.

The bankruptcy law is said to have originated in England. There is no question that the first law concerning bankruptcy was enacted in 1542.

Like pre pack administration, the designers of business bankruptcy had remedy for creditors as its principal purpose and not, as is mostly thought, for debtors. This is exemplified by the fact that during the early stages of the enactment of this law, and especially during the rule of King Henry VII, the law gave creditors the power to seize all of the assets of a businessman who was unable to pay debts they owed creditors.