Spitfire747, sorry to hear of your difficulties (and all the other students). You asked how a bankruptcy works and as there are so many training establishments going under at present, I'll try and give the brief outline. I'm not an accountant, just someone who has run many companies (none have gone bust!) so I've seen it happen several times and I've lost money several times. Please excuse spelling but its late and I havent time to check everything...
Limited companies don't go bankrupt, they go into either receivership (liquidation) or administration. The process is started (usually) by one of the major creditors who decides that their best chance of getting some money is to apply for a receivership or administration order.
With receivership, the receiver sells all the assets he can get his hands on to raise the max amount of cash. The preferential creditors i.e. the government (inland revenue and vat and National Insurance) get paid in full. If there is anything left the next lot of preferential creditors (the banks) also get paid in full, or whatever is left. If there is still any money left it is shared between the "unsecured creditors" i.e. you and I. Oh I forgot, the receiver takes his fee (large) first.
With Administration, the system is slightly different in that the large creditor who has applied for the administration order thinks that the best chance of getting his money back is to run the company (perhaps for a limited time) himself. In other words, it is a pretty blunt statement that he thinks the current owners can't do it properly. The company can sometimes be sold in this state, allowing some of the creditors to get their money back.
The chance of any unsecured creditors (you and me) getting anything at all are very small (but not zero). Sometimes a distribution of, say, 3p in the pound is made. Remember, if there was enough money to pay the creditors the company would not have gone bust.
As far as I know, it always has been a criminal offence to carry on trading if the directors are aware that the company is insolvent. This legislation has got tighter over the past twenty years but getting fraud convictions is not easy - remember the Maxwells?
The above is the approximate version. If someone in the insolvency business wants to correct any errors, please feel free to do so.
Tips for future students (or anyone else):
1. Don't pay in advance. Resist the pressure. The more pressure they give you, the more likely they are to be having cash-flow problems. Remember, the only reason companies go bust is because they run out of cash. There is no other reason.
2. If you can, pay by credit card. Be very suspicious if they don't accept visa and mastercard. They may give spurious reasons like it would add to their costs, but a well run business pays very little for accepting credit cards, particularly with high average transaction values. One reason a company might have difficulties in taking cards is if any of the directors have a poor track record. Because the banks have to re-imburse they don't like to give card facilities to companies whose directors might not be completely pukka.
3. Don't confuse all plastic cards with credit cards. The protection you get is only with credit cards. A Debit card (Delta or Switch) might have the Visa or Mastercard logos on it but it gives you no protection against the company being unable to supply the goods or services you have purchased. This is an easy trap to fall into and I haven't seen it mentioned here before. In Law, a credit card is something very specific and it doesn't include debit cards and charge cards. Be careful !