ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-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: -Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Detailed explanation-4: -Insolvency is when a company or person can’t pay debts when they are due. There are several options available to an insolvent company or person: the most common corporate insolvency procedures for an insolvent company are liquidation, voluntary administration and receivership.

Detailed explanation-5: -Insolvency is a financial state where a person cannot meet debt payments on time. Bankruptcy is a legal process that happens when the individual declares he or she can no longer pay back his or her debts to creditors.