Bankruptcy is usually a legally declaration of individuals or organizations inability to pay their creditors. This request is done by the creditors in order for them to recoup a fraction of what they are owed by an individual or an organization. However, bankruptcy can also be initiated by the individuals themselves or organization in case they feel that they are not capable of paying their debts.
In simple words, an individual or an organization is insolvent or bankrupt if it cannot pay his debts or discharge his liabilities on the due date. The creditors or the debtors themselves may present a petition to the court that a receiving order should be made.
For this case, Beren took the correct step of filing an involuntary petition with the court of law to declare their partnership bankrupt as indicated in chapter 7. Indeed the partnership had exceeded their estimate of purchasing and renovating the office building to a point of accumulating debts amounting to $380,000 against the $200,000 they had set aside for this and effort by Beren to convince other partners to seek additional funds bore no fruits.
On the other had Elliot and Mannino objected to Beren's idea of involuntary bankruptcy under Chapter 7. ...