insolvency
Definition
In legal terminology, the situation where the liabilities of a person or firm exceed its assets. In practice, however, insolvency is the situation where an entity cannot raise enough cash to meet its obligations, or to pay debts as they become due for payment. Properly called technical insolvency, it may occur even when the value of an entity's total assets exceeds its total liabilities. Mere insolvency does not afford enough ground for lenders to petition for involuntary bankruptcy of the borrower, or force a liquidation of his or her assets.
insolvency is in the Accounting & Auditing, Banking, Commerce & Finance and Corporate, Commercial, & General Law subjects.
insolvency appears in the definitions of the following terms: liquidity crisis, disqualification of directors, run, overtrading, members' voluntary liquidation, exploding letter of credit, wrongful trading and bankruptcy
insolvency appears in the other term: insolvency practitioner
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