Latest News

BRI Business Recovery & Insolvency (Northampton)

What is the difference between bankruptcy and insolvency?

Posted: 11/12/19 by BRI Business Recovery & Insolvency (Northampton)

Bankruptcy in the United Kingdom only applies to an individual, Katie Price being one of the most recent celebrities declared bankrupt. Unlike the United States, partnership entities or limited companies do not become bankrupt.

Insolvency, on the other hand, is a global term that is used to describe all types of financial failure. Applicable to individuals, partnerships and limited companies.

Bankruptcy is just one of the various types of personal insolvency, one of which Katie Price had entered and failed to satisfy, an individual voluntary arrangement. Others include debt relief orders for debts less than £20,000 and debt management plans.

An individual, whether in business, employed or unemployed, can be declared bankrupt if they personally owe more than £5,000 to any creditor. Creditors that are owed money can petition for an individual’s bankruptcy. The individual can also apply to the court to make themselves bankrupt.

There are a few different types of insolvency, of which only one type is bankruptcy. Under the insolvency regime, there are various possible types of financial problems. For companies and partnerships, these include administrations, liquidations, company voluntary arrangements, and partnership voluntary arrangements. Many of these allow a business to be rescued out of an insolvent position.

  • Where a business or individual’s liabilities (what you owe) exceed your assets (what you own).
  • Where you are unable to pay your debts as they fall due.

If you are facing financial difficulties and wish to discuss recovery options, please contact any one of the management team at BRI Business Recovery and Insolvency.

Back to Latest News

World Pay Logo