BPSC – Combined Competitive Examination · Question 115
Consider the following statements regarding insolvency and bankruptcy: 1. Bankruptcy refers to a financial state in which an individual or entity is unable to pay debts as they fall due. 2. Insolvency refers to a legal process where the debtor's assets are liquidated or reorganised for creditors. 3. Bankruptcy is a state whereas insolvency is the conclusion. 4. The Insolvency and Bankruptcy Board of India (IBBI) regulates insolvency and bankruptcy proceedings. Which of the above statements is/are correct?
Show answer & explanation
Answer: (C) Only 4
Explanation
Insolvency is a financial state; bankruptcy is a legal declaration. IBBI (2016) regulates the process under the IBC.
- (A) Incorrect
Wrong: statements 1–3 swap the two terms.
- (B) Incorrect
Wrong: 2 and 3 are wrong.
- (C) Correct
Correct: insolvency is the state of inability to pay; bankruptcy is the legal outcome; only 4 is correct.
- (D) Incorrect
Wrong: these definitions are reversed.