There is a clear distinction between these two terms, but they can be easily confused. Insolvency simply refers to a state where people or companies cannot pay their debts as they fall due. Bankruptcy , which is a more complex situation, applies to people only.
Bankruptcy involves a change of legal status.
Insolvent Companies Insolvent companies can go into receivership, liquidation or both. Companies in liquidation seldom continue trading, unless it is a way of encouraging someone else to buy the company as a going concern.