- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
-
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
- Courses
What is Insolvency?
Insolvency refers to a term for when an organization or individual cannot meet its obligation to pay debts as they become due. Under the US Bankruptcy code and the Internal Revenue Code, insolvency is generally when one's debts exceed their assets.
Just because a business has debts that exceed it's assets does not mean that it is in financial trouble. Many growth-based businesses are technically insolvent. Insolvency generally leads to financial distress when the business is unable to acquire or secure funds to pay its debt obligations as they become due. In such a situation, the business may consider filing for bankruptcy protection.
Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY
Related Topics
- What is Bankruptcy?
- Insolvency - Definition
- What are the types of business bankruptcy?
- Chapter 9 Bankruptcy
- Chapter 12 Bankruptcy
- Chapter 15 Bankruptcy