insolvency policies

Insolvency policies are rules and procedures designed to manage situations where individuals or companies cannot pay their debts. They aim to ensure fair treatment for creditors while providing debtors a chance to reorganize or discharge their obligations. These policies promote financial stability by setting clear guidelines for resolving insolvencies, whether through restructuring, liquidation, or other methods. The goal is to balance the interests of all parties involved, minimize economic disruption, and encourage responsible borrowing and lending practices. In essence, insolvency policies provide a structured framework to handle financial distress effectively and fairly.