What is the difference between bankruptcy and insolvency?

Bankruptcy is a legal status and insolvency is a situation. If an organisation is insolvent, it means the entity is incapable of paying the debts. If an entity or person is declared bankrupt, then the debts must be paid off by restructuring the payment process with the help of the Government or by selling assets. You can read about Insolvency And Bankruptcy Code (IBC) – IBC Amendment Bill 2021 [UPSC Notes GS III] in the given link.

Further readings:

1. Non Performing Assets (NPA) – Facts for UPSC GS-III
2. Bad Banks – Idea Proposed by Indian Banking Association (IBA) Due to COVID-19