bankruptcy

n. state of losing property to one's creditors due to unpaid debts

Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Creditors may file a bankruptcy petition against a debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor (a "voluntary bankruptcy" that is filed by the bankrupt individual or organization).
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Noun
1. a state of complete lack of some abstract property; "spiritual bankruptcy"; "moral bankruptcy"; "intellectual bankruptcy"
(hypernym) failure
2. inability to discharge all your debts as they come due; "the company had to declare bankruptcy"; "fraudulent loans led to the failure of many banks"
(synonym) failure
(hypernym) insolvency
(derivation) bankrupt, ruin, break, smash
3. a legal process intended to insure equality among the creditors of a corporation declared in bankruptcy
(hypernym) proceeding, legal proceeding, proceedings
(classification) law, jurisprudence

(n.)
The state of being actually or legally bankrupt.
  

(n.)
The act or process of becoming a bankrupt.
  

(n.)
Complete loss; -- followed by of.
  

State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from the stockholders to the bondholders.