Insolvency
state of being unable to pay the debts at maturity by a person or company / From Wikipedia, the free encyclopedia
Insolvency means that a person or organisation does not have enough money to pay all of the people who they owe money.[1] Different countries have different definitions of exactly what insolvency means, but usually it means either that:
- a person cannot pay their debts as they fall due (which is sometimes called cash flow insolvency); or
- the total amount of a person's liabilities is larger than the total amount of their assets (which is called balance sheet insolvency).
When a person or a business is insolvent, then people whom they owe money to may apply to court to put then into bankruptcy.