Insolvency is a state where a person or company is unable to pay their debts as they fall due. It means that their liabilities exceed their assets, and they may be unable to meet their financial obligations. Insolvency can lead to bankruptcy, but it is not the same thing. Bankruptcy is a legal process that is designed to help individuals and companies deal with insolvency. It involves a court process in which a debtor's assets are liquidated, and the proceeds are distributed among their creditors. The goal of bankruptcy is to provide a fresh start for the debtor by discharging their debts or arranging a repayment plan.

Bankruptcy laws can vary by country, but typically there are different types of bankruptcy proceedings that can be initiated by either the debtor or their creditors. For individuals, theremay be options for liquidation or reorganization of debts. For businesses, there may be options for restructuring or selling the business. Insolvency and bankruptcy can have significant consequences for individuals and companies, including damage to credit ratings and reputations, and potential loss of assets. It is important to seek professional advice if you are experiencing financial difficulties to explore your options and understand the potential consequences.