Bankruptcy and insolvency as economic and legal terms

Abstract

The terms bankruptcy and insolvency are construed in different ways, which has resulted in the emergence of discrepancies in their definitions. There is a noticeable division among researchers in terms of the referents of the concepts of bankruptcy and insolvency. Varying definitions of bankruptcy and insolvency are employed, depending on whether the perspective of the legal sphere or the economic sphere is adopted. In the article, the authors attempt to define these concepts and define the relations that exist between them. The aim is to show that the legal understanding of the terms bankruptcy and insolvency is subordinate to their meaning in the economic sciences. Due to the subject under analysis and the nature of the sources, this article employs the qualitative method, based on interpretative research. The interpretative research was conducted with the use of ethnographic research strategies based on legal acts and the achievements of the doctrine and judicature. The conducted research has shown that as a result of the development of bankruptcy law, the legal understanding of the concept of bankruptcy and insolvency has been subordinated to the meaning given to this concept in the economic sciences. This allows for the use of economic tools and dynamic interpretation, so that the decisions of bankruptcy courts are in line with the dynamically changing socio-economic reality.