What is typically a consequence of bankruptcy?

The consequence of bankruptcy that is often observed is the restructuring or eliminating of debts. When a business files for bankruptcy, particularly under Chapter 11 in the United States, it is given the opportunity to reorganize its financial obligations while continuing its operations. This process allows the company to negotiate with creditors to either reduce the total debt or modify the repayment terms. This can stabilize the business’s financial situation, potentially putting it back on the path to profitability.

In such scenarios, the aim is not necessarily the closure of the business but rather an effort to emerge stronger and more viable after addressing unsustainable debt levels. Thus, restructuring or eliminating debts is a critical component of the bankruptcy process, as it provides a chance for revival rather than outright termination of the business's activities.