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An incapacity to pay debts upon the date when they become due in the ordinary course of business; the condition of an individual whose property and assets are inadequate to discharge the person's debts.


n. 1) the condition of having more debts (liabilities) than total assets which might be available to pay them, even if the assets were mortgaged or sold. 2) a determination by a bankruptcy court that a person or business cannot raise the funds to pay all of his/her debts. The court will then "discharge" (forgive) some or all of the debts, leaving those creditors holding the bag and not getting what is owed them. The supposedly insolvent individual debtor, even though found to be bankrupt, is allowed certain exemptions, which permit him/her to retain a car, business equipment, personal property, and often a home as long as he/she continues to make payments on a loan secured by the property. (See: bankruptcy)

See: bankruptcy, default, dishonor, failure, indigence, nonpayment, poverty


1 inability to pay debts as they fall due.
2 excess of liabilities over assets.

INSOLVENCY. The state or condition of a person who is insolvent. (q. v.) .
     2. Insolvency may be simple or notorious. Simple insolvency is the debtor's inability to pay his debts; and is attended by no legal badge of notoriety, or promulgation. Notorious insolvency is that which is designated by some public act, by which it becomes notorious and irretrievable, as applying for the benefit of the insolvent laws, and being discharged under the same.
     3. Insolvency is a term of more extensive signification than bankruptcy, and includes all kinds of inability to pay a just debt. 2 Bell's Commentaries, 162, 6th ed.

References in periodicals archive ?
But this has dealt a blow to firms that handle corporate insolvencies.
This was reinforced by the fact that there were a vastly higher number of personal insolvencies recorded at the height of the financial crisis.
Corporate insolvencies peaked in 2009 for England and Wales.
2 insolvencies per 10,000 adults, the highest for a decade.
The highest number of corporate insolvencies was in London with 887, followed by the North West with 535 and Yorkshire and North Lincolnshire with 458.
In 2010, Q4 saw a drop in insolvencies from Q3 but in 2011, there was a 12% increase.
Experian said that although instances of personal insolvency continue to be most frequent among the most disadvantaged people in the UK, their share of new insolvencies declined in 2010.
In 2009, the number of corporate insolvencies in Austria surged 8.
An upward trend will also be echoed in upcoming figures for corporate insolvencies, despite the fact that the latest insolvency figures for the fourth quarter of 2009 are significantly below expectations for this point in the recession.
In fact, a June 1968 Senate Sub-committee hearing, which discussed the need for protection against insurer insolvencies, indicated that such a safety net was meant for individual policyholders and claimants, not large commercial insureds.
Beneficial holders beware: Insolvencies requiring action directly from beneficial holders of indenture-less debt securities
Some 20,826 individual insolvencies were made in the first three months of 2015, which is also 18.