Insolvency - The inability to satisfy creditors or discharge liabilities. Early legislation in NSW addressed insolvency rather than bankruptcy.
Bankruptcy - Bankruptcy is similar, but not identical to insolvency. Bankruptcy involves the sequestration of a person's assets when they are unable to meet the demands of creditors. Bankruptcy is a state in which a person is unable to pay creditors and is required to undergo a legal process that usually results in liquidation of his/her estate in order to meet expenses (as least in part). If a person is declared to be a bankrupt then he or she cannot operate a business for profit, enter a business contract or borrow money.