Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Tutoring
  • Home
  • Law, Transactions, & Risk Management
  • Commercial Law: Contract, Payments, Security Interests, & Bankruptcy

Insolvency - Explained

What is Insolvency?

Written by Jason Gordon

Updated at September 26th, 2021

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • 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
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What is Insolvency?Academic Research

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  

Academic Research on Insolvency


insolvency

Was this article helpful?

Yes
No

Related Articles

  • Methods of Resolving Breach of Contract - Explained
  • Unperfected Lien - Explained
  • Avoiding Powers of Debtor in Possession - Explained
  • Rights of a Mortgage Lender Holding a Security Interest - Explained



©2011-2023. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand