Part 1: A Broad Overview of Bankruptcy
‘As privileged professionals, who live by the words of the English language, lawyers have a special duty to be clear in what they say and write’[1]
When discussing any area of law, precision is essential.
A common source of confusion amongst both lawyers and the public generally is the difference between insolvency and bankruptcy. Though you may see the terms being used interchangeably (especially in legal dramas), the two concepts are distinct.
Insolvency and Bankruptcy: A Distinction
Insolvency is defined by the Corporations Act 2001 (Cth) as the inability to pay one’s debts as and when they fall due.[2]
There are two types of insolvency: personal and corporate insolvency. Whilst it…
