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Bankruptcy means a legal person (which may be a company) can not meet their debts. This means that Banks are likely to be creditors and that while they do get "first call" on any assets, there is a likelihood that they will not recover all the money they have lent to the legal person. This means the banks could lose money. However they factor this possibility in to all their lending and make overall charges to cover such an eventuality. They also make sure that before they lend, to a company they have a good Idea that the company is "sound".

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9y ago

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