A business is in a situation of failure or filing for bankruptcy from the moment when a judicial settlement procedure is opened against it.
This procedure occurs when a legal unit has suspended payments, that is, when it is no longer capable of covering its current liabilities with its available assets.
The notion of failure must not be confused with the notion of death of the enterprise. The notion of death corresponds to the total stoppage of the company's economic activity. Not all failures lead to a death. For instance, a judgement opening failure proceedings (filing for bankruptcy of a company as part of judicial proceedings) does not necessarily culminate in liquidation.
Not all deaths are linked with a failure. For instance, a sole proprietorship can stops his activity because of retirement.