In most countries there are two tests for bankruptcy:

• a company that cannot pay its debts because there is not enough money in the bank
• a company with liabilities (or what it owes) that exceed its assets (such as property, inventory or what it is owed).

In the UK or in Europe, the first scenario would usually tip a company into liquidation unless it was rescued.
Under the second scenario, which is sometimes called balance sheet insolvency, the company is more likely to avoid liquidation by negotiating with its creditors.
Confusingly, UK firms will not go bankrupt at all - here the term is reserved for personal bankruptcies.

France has a system called Judicial Composition, but only about 7% of bankrupt companies go down this route.

What happens when a company falls into liquidation?
A company is liquidated when the situation is hopeless and there is no plan to rescue it. At this point an insolvency agent takes over the company from its management, sells the assets and returns any money to its creditors.

It is not economically profitable to open bankruptcy proceedings against certain types of businesses in Spain and therefore, the number of insolvencies is quite low. In France, more than 40,000 insolvency proceedings were opened in 2004, but fewer than 600 were opened in Spain. At the same time the average bad debt write-off rate in France was 1.3% compared to Spain with 2.6%.
Bankruptcy in Switzerland is a consequence of insolvency. It is a court ordered form of debt enforcement proceedings that applies to registered commercial entities only. When bankruptcy is filed, all assets of the debtor are liquidated under the administration of the creditors.