Bankruptcy is business failure that occurs when a firm's liabilities exceed the fair market value of its assets.

Question

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Bankruptcy occurs when a company's liabilities exceed the fair market value of its assets and it is unable to meet its financial obligations. This leads to a situation where the company's assets are sold to pay off its debts, and shareholders and creditors may lose some or all of their investments.

Bankruptcy Is Business Failure That Occurs When a Firm's Liabilities