Bankruptcy is a legal process where a debtor, unable to pay his debts, files for bankruptcy and his assets are liquidated in order to pay off the creditors. It means the state of the business where the income generated is not adequate to pay off the debts of the company.
Filing bankruptcy streamlines the process and is a convenient process to pay off the debts as soon as possible and start fresh. Though declaring bankruptcy largely affects the credit score of the debtor and also makes it very difficult to acquire loans in the future.
Sec 2(e) of the Insolvency and Bankruptcy code 2016 is applicable to all the partnership firms and individuals. Sec 78 of the code Part III deals with Insolvency Resolution and Bankruptcy for individual and partnership firms. Sec 78 states individuals and partnership firms where the amount of default is not less than one thousand rupees can file bankruptcy under this code.
Though the Ministry of Corporate Affairs (MCA) has notified section 78 of IBC Part III, it had only notified the part dealing with insolvency of personal guarantors to Corporate Debtors.The part relating to partnership firms and individuals is yet to be notified. Therefore until then an Individual can file for bankruptcy and insolvency proceeding as per the previous law that is Presidency Towns Insolvency Act 1902 and Presidency Insolvency Act 1920.
The Presidency Insolvency Towns Act 1902 is only limited to the towns of Bombay,Calcutta and Madras whereas the Presidency Insolvency Act is applicable to all other states.
As per this act, the High Court has the jurisdiction to try all the matters of insolvency under these laws an insolvency petition can be filed either by the debtor or creditor for an amount exceeding as little as Rs 500.
Therefore it can be seen that the Provisions have been simplified for the corporates to file bankruptcy but it is not the same for individuals and corporates.Till the time all the relevant sections are notified and in force,individuals have to resort to the old laws of insolvency to file insolvency.
“The views of the authors are personal“
 (https://economictimes.indiatimes.com/industry/banking/finance/banking/what-if-you-go-broke-like-anil-ambani-personal-bankruptcy-decoded/articleshow/68827983.cms?from=mdr, n.d.)