Insolvency has a number of aspects.
The Directors of Companies are under a statutory obligation not to allow the Company to trade whilst insolvent. They may be personally liable for the Company’s debts if they allow it to so trade. Winding up proceedings can be taken in Court, either on the basis that the Company is actually insolvent, or by it being deemed to be insolvent by its failure to comply with a Statutory Demand for payment of a debt. This demand does not have to be based on a judgment, although if not, evidence is needed to state that there is no genuine dispute about the debt. The Company can also be wound up by a resolution of either the members of the Company, or its creditors.
In any event, a Liquidator, who is a registered Accountant, is appointed to take control of the Company’s assets and affairs, and distribute the proceeds to creditors. The Company is then dissolved.
If it appears that there is some likelihood that the Company could trade out of its problems, the Directors can appoint an Administrator. The Administrator calls a meeting of Creditors, and there puts a proposal to enable the Company to carry on business. If the proposal is accepted, the Administrator hands control of the Company back to the Directors. If not, the Company is wound up.