The following are some terms commonly used for or associated with insolvency.
Bankruptcy – This is a personal insolvency procedure for individuals, not companies or businesses. If you're insolvent, you can enter bankruptcy (a legal status) by agreement or court order, and it protects you from creditor actions.
Liquidation – Liquidation is an insolvency process and refers to the orderly shutting down of a business. Assets are sold and the proceeds are used to repay creditors before shareholders. Liquidation is different to insolvency as not all company insolvencies result in liquidation.
Receivership – This insolvency procedure involves a secured creditor appointing an insolvency practitioner as the receiver to the company. The receiver then takes control of the secured assets to repay the creditor's debt. So receivership is quite different from insolvency as it's about creditors taking action in response to insolvency.
Voluntary administration – Voluntary administration is another type of insolvency procedure. It involves an external administrator taking charge of the company, investigating its affairs, and making recommendations to creditors about the company’s next steps.
Restructuring – Restructuring can be associated with insolvency but it's not focused just on the ability of a business to repay debt. It involves reorganisation of ownership, finance, operations, and/or other elements of a company to improve profitability.
Turnaround – Turnaround in a business sense usually means a formal plan, typically with turnaround experts, to revive a struggling business. As such, it's not the same as insolvency as it's a specific action plan to address insolvency or the risk of insolvency.
Arrears – If you're in arrears, you have left at least one invoice unpaid or not yet made on a debt amount that has become overdue. While being in arrears is similar to insolvency, you can be in arrears without being insolvent. For example, your business can afford to repay a debt but your employee forgot to make payment on time. Alternatively, your financial institution had a technical issue, so you're in arrears but not insolvent.