system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5 How do rich people go bankrupt yet continue to be multimillionaires?
gpt
Bankruptcy occurs when some entity cannot generate the necessary cash to settle immediate obligations. An illustrative example might be someone owning a $10m home but has a bill for $500,000 that they cannot pay. On paper, their net worth is $9.5m but they can still be forced into bankruptcy if their creditors insist on immediate payment. Bankruptcy is a court mandated process that resolves the situation among the various parties - there are complicated rules around how this works.