INSOLVENCY

Insolvency

Insolvency is the inability of a debtor to pay their debt. Cash flow insolvency involves a lack of liquidity to pay debts as they fall due. Balance sheet insolvency involves having negative net assets—where liabilities exceed assets. Insolvency is not a synonym for bankruptcy, which is a determination of insolvency made by a court of law with resulting legal orders intended to resolve the insolvency.

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insolvency

Noun

  1. The condition of being insolvent; the state or condition of a person who is insolvent; the condition of one who is unable to pay his debts as they fall due, or in the usual course of trade and business; as, a merchant's insolvency.
  2. Insufficiency to discharge all debts of the owner; as, the insolvency of an estate.
  3. The condition of having more debts than assets.


The above text is a snippet from Wiktionary: insolvency
and as such is available under the Creative Commons Attribution/Share-Alike License.

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