Terms "Insolvency" and "Bankruptcy" are synonymous in result but practically refer to different situations and consequences - Briefly explain.

The terms 'Insolvency' and 'Bankruptcy' are generally used interchangeably in common parlance but there is a marked distinction between the two. Insolvency and bankruptcy are not synonymous. The term 'insolvency' denotes the state of one whose assets are insufficient to pay his debts; or his general inability to pay his debts. The term 'insolvency' is used in a restricted sense to express the inability of a person or an entity to pay his debts as they become due in the ordinary course of business. 'Bankruptcy' is a legal status of a person or an entity who cannot repay debts to creditors. The bankruptcy process begins with filing of a petition in a court or before an appropriate authority designated for this purpose. The debtor's assets are then evaluated and used to pay the creditors in accordance with law. Thus insolvency is a state and bankruptcy is the conclusion. The term insolvency is used for individuals as well as organisations/ corporates. If insolvency is not resolved, it leads to bankruptcy in case of individuals and liquidation in case of corporates.