A Comparative Study of Corporate Insolvency and Personal Bankruptcy: Legal Frameworks and Its Implications

Abstract

This study conducts a comparative analysis of corporate insolvency and personal bankruptcy, exploring their distinct legal frameworks, processes, and socio-economic implications. Corporate insolvency, applicable to companies, primarily seeks to restructure or dissolve businesses while preserving stakeholder interests, including those of creditors, employees, and shareholders. Personal bankruptcy, on the other hand, addresses individual financial distress, offering relief through asset liquidation or repayment plans.
The paper examines statutory regimes in jurisdictions such as the United States, the United Kingdom, and India, highlighting the procedural differences, stakeholder roles, and legal consequences of each system. For instance, corporate insolvency often involves professional administrators, tribunals, and complex resolutions, whereas personal bankruptcy focuses on debtor rehabilitation, with simpler, court-supervised proceedings.
Through a comparative framework, the study underscores the broader socio-economic impacts, including employment disruptions, market instability, and personal stigma. It also identifies emerging trends, such as digital insolvency platforms and post-pandemic reforms, while advocating for measures like financial literacy programs, streamlined processes, and balanced asset protection.
The findings aim to enhance the understanding of these legal mechanisms, offering insights for reforms that ensure fairness, efficiency, and accessibility while fostering economic resilience and individual dignity.