Individuals and corporations  who are unable to pay their obligations are subject to insolvency proceedings. Individual bankruptcy and corporate liquidation are the most prevalent forms of insolvency in the United Kingdom.

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Following is a general overview of insolvency:

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Insolvency assessment: Determining if a person or business is insolvent is the first stage in the insolvency procedure. This indicates that they cannot pay their bills when they become due or that their liabilities surpass their assets.

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Consult an authorised insolvency practitioner: If a person or business is insolvent, they should seek the counsel of a licenced insolvency practitioner (IP), who can evaluate their position and recommend the best course of action.

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Consider the choices: The IP may suggest bankruptcy, individual voluntary arrangements (IVAs), or company voluntary arrangements(CVAs), depending on the circumstances.

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Individuals might file for bankruptcy if they are unable to pay their debts and have no other feasible options. This involves filing a petition with the court and turning over management of their assets and finances to a trustee who will administer the bankruptcy.

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In order to enter liquidation, a corporation must be unable to pay its debts and have exhausted all other available options. This requires the appointment of a liquidator who will sell the company's assets to pay off its creditors.

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The objective of both bankruptcy and liquidation is to repay as much of the debt as feasible. Depending on the circumstances, any remaining debt may be forgiven.

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It is essential to realise that insolvency can be a complicated process with major legal and financial consequences. Anyone who is contemplating bankruptcy or liquidation, or who is dealing with an insolvent individual or business, should obtain the counsel of a licenced insolvency practitioner or other qualified professional.