Bankruptcy relates to individuals, not companies. “Going bankrupt” generally means committing an “act of bankruptcy”, as defined in the Bankruptcy Act. Committing an “act of bankruptcy” includes, but is not limited to: acting in a manner which indicates that the debtor in question is bankrupt (such as refusing to pay invoices); failing to pay an amount that is due under the judgment of a court; or acting in a manner which is designed to delay creditors.
Once a debtor has committed an “act of bankruptcy”, any creditor can petition the courts to have the debtor declared bankrupt. The court then decides whether to grant a sequestration order, which is effectively an order declaring the person in question bankrupt.
If the court issues a sequestration order a trustee will be appointed as administrator of the financial affairs of the bankrupt person. Generally, the role of the trustee in bankruptcy is to sell the debtor’s assets and repay the debtor’s creditors. It is important to note that secured creditors will be paid first. Unsecured creditors may only receive a small percentage of the amount owing to them, if anything.
An individual will remain bankrupt until he or she is discharged, which usually occurs after 3 years, but can be earlier if ordered by a court.
Finally, remember that if you discover that you have committed an “act of bankruptcy”, you can ask a court to declare you bankrupt. In other words, you will be declaring voluntary bankruptcy.