ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Insolvency is a state of financial distress in which a person or business is unable to pay their debts. Insolvency in a company can arise from various situations that lead to poor cash flow.

Detailed explanation-2: -Generally speaking, insolvency refers to situations where a debtor cannot pay the debts they owe. For instance, a troubled company may become insolvent when it is unable to repay its creditors money owed on time, often leading to a bankruptcy filing.

Detailed explanation-3: -What is Bankruptcy. Definition: When an organisation is unable to honour its financial obligations or make payment to its creditors, it files for bankruptcy. A petition is filed in the court for the same where all the outstanding debts of the company are measured and paid out if not in full from the company’s assets.

Detailed explanation-4: -What Is Bankruptcy? Bankruptcy is a legal proceeding initiated when a person or business is unable to repay outstanding debts or obligations. It offers a fresh start for people who can no longer afford to pay their bills.

Detailed explanation-5: -At the end of the process, most of your debts will be discharged and you will no longer be under any obligation to repay them. However, certain debts, like student loans, child support, and taxes, cannot be discharged.