Insolvency

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.

1. ↑ "What are the early warning signs of insolvency?". Insolvency Support. 2021-01-18. Retrieved 2021-04-06.