The terms insolvency, resolution, bankruptcy, and liquidation are interrelated concepts that form the foundation of the modern financial and legal framework for dealing with financial distress in individuals and business entities. These processes are central to ensuring the stability of credit markets, protection of creditor rights, and efficient utilisation of economic resources.
In India, these concepts are governed primarily by the Insolvency and Bankruptcy Code, 2016 (IBC), which provides a comprehensive mechanism for managing financial failure in a time-bound and transparent manner.
Insolvency
Insolvency refers to the financial condition of a person or entity that is unable to meet its debt obligations as they become due. In…