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Simple English definitions for legal terms
Chapter 22
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A quick definition of Chapter 22:
Chapter 22: When a company or organization files for bankruptcy for the second time after a previous attempt failed because they are unable to pay their debts or are at risk of not being able to pay their debts again.
A more thorough explanation:
Definition: Chapter 22 is a slang term used to describe a situation where a debtor, usually a corporation, files for bankruptcy for the second time shortly after a previous bankruptcy filing has failed. This happens because the debtor has become insolvent again or is threatened with insolvency once more.
Example: ABC Corporation filed for Chapter 11 bankruptcy in 2018 but failed to restructure its debts and emerge from bankruptcy. In 2019, ABC Corporation filed for bankruptcy again, which is known as Chapter 22 bankruptcy.
Explanation: The example illustrates how a corporation can file for bankruptcy twice, with the second filing being referred to as Chapter 22. In this case, ABC Corporation was unable to successfully restructure its debts and become financially stable after its first bankruptcy filing, leading to a second filing.