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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.

Use 'insolvency' in a Sentence

You need to know if you are getting close to insolvency and if so you must make some quick changes to avoid it.
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We needed to avoid insolvency because that would hurt our business and could cause us to go under as well.
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Nic Cage was surprised to find himself mired in insolvency; he could think of at least two ways of dividing up his white tigers for some quick cash.
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