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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 ?
The agreement also enforces cross-training of staff in order to enhance each party's understanding of the other's mission for effective utilisation of collective resources; capacity building of insolvency professionals and financial creditors; and joint efforts towards enhancing the level of awareness among financial creditors about the importance and necessity of swift insolvency resolution process of various types of borrowers in distress under the provisions of the Code.
Alec Pillmoor, personal insolvency partner at audit, tax and consulting firm RSM, said: "There are clearly growing levels of financial distress in some households, due in part to rising interest rates, falling wages or changes to employment status.
If the bulk insolvencies were excluded, the number of companies entering insolvency would have increased by 2.
As a consequence, Metrobank foreclosed one of the mortgages but the insolvency court refused to issue the certificate of sale in favor of the buyer because of its July 12, 2005 order.
The personal insolvency figures include bankruptcies, Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs).
The circumstances of this recovery have also given businesses the space and time needed to restructure themselves outside of the formal insolvency process.
Chris Wood, Yorkshire R3 committee member and partner at Clough Corporate Solutions in Cleckheaton, said: "Yorkshire and the Humber is one of the biggest centres for our profession, with almost a sixth of the UK's insolvency practitioners based here.
The insolvency practitioner will charge fees for setting up and supervising the IVA.
Richard Philpott, chairman of R3 Midlands and a partner at KPMG in the region, says more could be done to take advantage of insolvency practitioners' antifraud powers to help safeguard consumers.
The number of firms that went into receivership, the other main form of corporate insolvency, fell by 21% to 724 in 2014, the smallest number recorded since 2007.
This has been made possible with the QFC Authority (QFCA) amending its insolvency legislation as part of modernising the financial infrastructure of the country.
AS THE economy looks to be emerging at last from the longest and deepest recession in living memory, insolvency practitioners have been leftscratching their heads.