Since medieval times, the law has had to provide for the consequences of the financial failure of individuals, and later of groups of individuals and incorporated bodies.

The common law concept of insolvency has been codified, but with a significant difference, in the same terms in both s 5(2)–(3) of the Bankruptcy Act 1966 (Cth) (which is applicable to individuals), and s 95A of the Corporations Act 2001 (Cth) (CA) (applicable to corporations).

The various ways in which the administration of the property of insolvent individuals and companies are started, continued and ended are different. The main difference is that winding up a company usually leads to deregistration and the end of corporate existence; whereas an individual is generally released from bankruptcy after a period of time and allowed to resume normal financial life.

There are a number of other entities to which insolvency regimes may be applied.

The great majority of businesses in the modern economy are conducted in a corporate form, rather than by an individual or individuals, because of the benefits of limited liability. Accordingly, this guide deals only with corporate insolvency.

See Introduction to insolvency.