Bankruptcy Of Corporate America Today Essay
Chapter One: Introduction
Background of the study
Bankruptcy is a legal process established under the United States Constitution and federal law that allows consumers and firms that are unable to pay their debts to eliminate, or discharge, these legal obligation to repay many types of consumer and business debts thereby receiving a financial “fresh start” for the future (Filing bankruptcy, 2016). The history of bankruptcy dates to ancient Rome and the term "bankruptcy" was coined pursuant to Roman law and commercial practices of the day (Fitzpatrick & DiLullo, 2012). The term originated as a result of ancient Roman merchants conducting their business affairs in a public forum on a prominently placed bench known as a “banca”; in the event these merchants were unable to pay their theirs, Roman officials broke their benches (i.e., rupta) which signaled their financial distress (Fitzpatrick & DiLullo, 2012).
Today, companies in the United States have also inherited a long legacy of bankruptcy traditions and laws beginning with Article I of the U.S. Constitution (1789) that authorized the U.S. federal government to promulgate uniform bankruptcy laws (Fitzpatrick & DiLullo, 2012). The need for bankruptcy laws during this period in American history was largely restricted to commercial enterprises. For example, Matson (2003) reports that, “bankruptcy was rare for colonists and early Americans, though indebtedness was pervasive. Debt, whether…