ABSTRACT
A bankruptcy order against an individual has the effect of appropriating the bankrupt's assets for use in payment of bankrupt's creditors. The modern bankruptcy law serves three purposes. First is to ensure that the assets of the bankrupt are distributed rateably among creditors. The second, which is interrelated with the first, that one creditor does not obtain an undue advantage over other creditors. The third is to bring about the discharge of the debtor from future liability for his existing debts, so that the debtor may start afresh. The essential basis of the law relating to corporate insolvency is the same as that concerning personal insolvency. An insolvency process may be brought by creditor in respect of a company that is insolvent, with the objective of producing the payment of its unpaid debts. Whether a company is able to pay its debts, when they fall due is to be determined having regard to the company's financial position as a whole.
