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One of my customers filed for bankruptcy protection listing almost $3 million in assets, and less than $2 million in liabilities. How can they be bankrupt?

Answer: There are two tests, and failing one or both can lead to a bankruptcy filing. The first test is a company's liabilities exceed its assets. The second test is that the company is unable to pay its bills as they come due. Since your customer passed the first test, it must be claiming to have failed the second - qualifying it for Chapter 11 protection.

 
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