The term ‘bankruptcy' applies to individuals and not to companies. Individuals are often declared bankrupt where their unincorporated business has unfortunately failed.
It is the judicial process used where debtors are unable to pay debts as and when they arise, or even in the near future. On the other hand it may be where there will be a liability falling due in the near future which the debtor will be unable to meet. If you find yourself to be in any of these situations, you will be considered to be insolvent.
If the court makes a bankruptcy order, you will become bankrupt and the appointed trustee in bankruptcy will be required to distribute your property to all your creditors. Once all your debts have been cleared, the bankruptcy may be discharged. An Individual Voluntary Arrangement is an alternative to bankruptcy and should be considered before deciding to use the bankruptcy route.