Bankruptcy

Bankruptcy can occur due to unfortunate circumstances such as an auto accident, medical bills or circumstances beyond a person’s control. It can also occur because the business man or woman was a bad manager of a business. Bad management carries with it ethical implications as outlined in the section titled mismanagement.
Fraud can occur at the time of bankruptcy. For example, a building contractor knows he is headed into bankruptcy. Even knowing this he goes ahead and orders thirty thousand dollars in windows for a house. The windows arrive and he installs them. He pays himself handsomely in expectation of financial collapse. A week later he files. Since he does not pay for the windows the lumber company goes after the owners since they have lien rights on the house. The homeowner’s are hurt badly while the business person hides behind bankruptcy protection.
Bankruptcy can be caused by incompetence; the owner’s being over their head in a field of business they have little grasp of.

• Constructive Taking ?
• Constructive Fraud ?
• Deception ?
• Mismanagement
• Incompetence