Bankruptcy and IRS tax debts are deeply misunderstood topics, often surrounded by confusion and anxiety.

For individuals and businesses who know very little about these issues, it’s important to start with the basics – not all tax debts are wiped out by bankruptcy, and the rules for clearing IRS debts are complex. However, bankruptcy can provide relief, or at least breathing room, for those facing insurmountable tax bills.

Here’s what you need to know, presented in practical terms for the average taxpayer.

What Is Bankruptcy?

A knowing breach of the payment prohibition under insolvency law cannot be inferred from a breach of the obligation to file for insolvency.

It is a recurring practical issue in insolvency proceedings how the creditor may prove that an invoice was duly communicated to the debtor. In a recent decision, the Hungarian court examined if screenshots taken from an electronic invoicing system suffice to prove delivery and awareness of an invoice, in the absence of traditional postal proof. In our article we analyse the decision.

1. Facts of the case

As economic pressures mount and corporate distress becomes increasingly prevalent, lenders and borrowers alike are seeking proactive strategies to safeguard their interests without resorting to immediate enforcement action or commence other restructuring or insolvency proceedings. Whilst lenders typically prefer to avoid the costs and complexities of accelerating loans or enforcing security, they require effective mechanisms to monitor deteriorating financial positions of the borrower and maintain influence over critical business decisions. 

On 3 December 2025, the Official Gazette published Law no. 202/2025 that amends and supplements Law no. 213/2015 on the Insureds Guarantee Fund (FGA) and Law no. 85/2014 on insolvency prevention and insolvency proceedings.

These amendments significantly recalibrate the institutional design, financing toolkit, and cross-border coordination of Romania’s insurance guarantee scheme, with particular emphasis on the handling of motor third party liability (MTPL) insurance claims and alignment with the EU framework introduced by Directive 2021/2118.

The Insolvency and Bankruptcy Board of India (IBBI) has issued the Insolvency Professionals to act as IRPs, RPs, Liquidators and Bankruptcy Trustees (Recommendation) (Second) Guidelines, 2025, which will govern appointments for the period January 1, 2026 to June 30, 2026.

In the recent decision of AlphaBow Energy Ltd. (Re) (“AlphaBow”),^[1] the Alberta Court of King’s Bench dismissed AlphaBow’s application to stay the Alberta Energy Regulator’s (“AER”) request for a security deposit for the duration of its restructuring proceedings.

Background

The Insolvency Service has for many decades been the Government department responsible for the oversight of bankruptcies, compulsory insolvencies and, in more serious cases, the disqualification of individual directors.