Legal Framework for Insolvency

The legal framework for insolvency provides the rules and procedures that govern how individuals or companies manage situations where they are unable to pay their debts. It aims to balance the interests of debtors and creditors, offering options like restructuring or liquidation to resolve financial difficulties. Laws specify how assets are to be used to settle debts, set procedures for insolvency filings, and establish oversight by courts or regulatory authorities. This framework ensures transparency, fairness, and orderly resolution, helping debts be managed systematically while providing some protection to both parties.