Question

Matthew opens a high-end clothing store, borrows funds to rent space and buy inventory, but fails to pay back his creditors. Two years later they seek to force him into Chapter 7 bankruptcy through .

Answer 1

Two years later, the lenders seek to force him into bankruptcy through involuntary bankruptcy.

Explanation:

• In order to derive the principal amount lent by a lender to a business that has now become incapable of returning the amount, the lender can request the concerned governmental authority to declare the business as bankrupt.
• This can be done without the consent of the owner of the business who has borrowed money from the lenders.
• In such a case, the government assists the borrower to return the money of the lenders which is why the lenders try to involuntarily declare the business as bankrupt.