Person or firm whose liabilities exceed the value of owned assets. It is commonly illegal for the directors of an insolvent firm to continue to trade after becoming aware of their insolvent position. If despite their knowledge of the firm's insolvent position they do not refrain from receiving goods on credit, they may be charged with fraudulent misrepresentation of facts and may become personally liable for the firm's debts. If a seller discovers the insolvent status of a buyer after making a sale, the seller can reclaim the goods within a certain period.
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