Bankruptcy occurs to individuals while insolvency happens to corporations. Irrespective of the legal technicalities bankruptcy or insolvency is where the legal operator of the business is unable to pay the debts of the business as and when they fall due. Generally, bankruptcy and insolvency befall a business not by choice; but despite the best efforts of an owner.
When a business ceases due to the bankruptcy of its owner(s) or the failure of a corporation due to insolvency, the decisions on whether the business is sold or closed is not that of the owner but of the type of insolvency practitioner that takes control of the business.
The owners concerns in these circumstances are:
Can you prevent yourself from being declared bankrupt by entering into a Part X arrangement?
If you are declared bankrupt what tare the consequences to you continuing in a profession or trade? For instance, solicitors who are bankrupts cannot trade on their own account. They may be employees of a legal practice but cannot operate a legal practice as a sole trader or partner.
What effect will bankruptcy have upon you and for how long?
Whether you will have assets sufficient to meet personal debts you may have or guarantees that you have personally given in support of the business.
Will you be able to continue to operate a business, due to the bankruptcy preventing you from conducting a similar business.
If a director of a company that has been liquidated, were you a director at a time when the company was trading insolvently? If so, you may have personal liability for the debts incurred by the company during this time.