Bankruptcy
In one sentenceThe situation of a debtor whose debts exceed their assets or who stops paying their due debts, and the procedures that govern it under the Bankruptcy Law.
Simply put
The Bankruptcy Law in the Kingdom is not limited to liquidation; it includes procedures aimed at rescuing the business, such as protective settlement and financial reorganization, and liquidation procedures when continuing is not possible.
For the accountant: signs of distress (repeated losses, inability to pay salaries or suppliers) call for an assessment of the going concern basis, and may require disclosure in the financial statements.
Example
A factory accumulated debts to suppliers and banks that it could no longer pay, but it has profitable contracts coming. Instead of liquidation, it applied for financial reorganization to agree with its creditors on rescheduling the debts and continue operating.
Don't confuse it with
Company liquidationLiquidation ends the company and sells its assets; it is one of the bankruptcy procedures, not all of them.