Bankruptcy Vs Liquidation

It’s easy to get confused between the terms Bankruptcy and Liquidation.  In other countries around the world they are interchangeable and, in some languages, mean the same thing.  In Denmark, for example, an application must be made to the Court for the appointment of a Trustee in the Bankruptcy of either a company or an Individual.  The term Liquidation is not used.

In New Zealand, the term bankruptcy refers to a Personal Bankruptcy i.e. an individual becoming or being declared insolvent.  The term Liquidation, however, refers to a corporate entity becoming insolvent i.e. a company or incorporated society.


In Australia, for example, it is possible for a registered Insolvency Practitioner to be appointed to handle a Personal Bankruptcy.  In New Zealand, all Personal Bankruptcies are handled by the Insolvency and Trustee Service who are part of the Ministry of Business Innovation & Employment.


An Insolvency Practitioner in New Zealand can handle a creditor compromise negotiation for an individual or a company but they cannot be appointed trustee for the Bankruptcy of an individual.  They can, however, be appointed as Liquidators of a company or other corporate entity.


For Personal Bankruptcy advice, we would always recommend making the Insolvency & Trustee Service your first point of call.  Their website is and their Freephone number is 0508 INSOLVENCY (0508 467 658).  They can talk you through the options available to you on a personal level.


If you have a potential corporate insolvency problem or would like to negotiate a creditor compromise, give us a call on 0800 343 343 or click here to book a consultation with us.  We’d be happy to help steer you in the right direction.