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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 ?
A very capable and trusted insolvency lawyer, Rory has formed strong relationships with insolvency practitioners and his promotion is well deserved".
Michael Jaffe Lawyer Specialist in Tax Law Specialist in Insolvency Law Franz-Joseph-Str.
Some real progress has been made over the last year on issues relating to both corporate and personal insolvency and we'd expect to see positive outcomes resulting this year as the changes begin to bed in - particularly around the numbers of struggling yet viable businesses that can be saved.
Since the financial crisis that swept across Europe in 2008, insolvency procedures have significantly improved in some countries of south-eastern Europe, although these changes take time and the outcome is unpredictable.
The survey also indicates the need for the personal insolvency regime to be 'future-proofed' against a possible rise in insolvencies once interest rates start to increase.
The insurer's Vermont regulator asserted negligence claims on grounds that if the outside auditor had conducted a proper audit, the regulator would have learned that Ambassador was near insolvency and would have placed the company into receivership 20 months sooner.
It also includes special regional reports from Europe, Asia and Australia, and updates on agency and government policies that impact corporate insolvencies, as well as general corporate insolvency materials, companies regulation, partnerships and societies regulations, court liquidation, creditors' voluntary liquidation, intangible assets, charges and fees and priorities.
The Osnabrueck court had granted insolvency under self-administration, similar to the US Chapter 11, in the summer of 2005.
It examines the impact of the Insolvency Act 2000 and the Enterprise Act 2002, and discusses the treatment of bankruptcy within the global economy.
However, in many states, including California and Delaware, directors may become subject to claims by creditors for breach of fiduciary duty if they take or fail to take certain actions when a corporation is in the vicinity of insolvency.
They may also have questions about the expertise of local judges, particularly in those systems where non-bankruptcy judges may be assigned to hear insolvency cases with all of their inherent complexities.
1999), aff'g 109 TC 463 (1997), the Ninth Circuit had to decide the issue of "when is a liability a liability" for insolvency purposes.