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A firm that is unable to pay debts (its liabilities exceed its assets).


Describing a situation in which an individual or firm is unable to service its debts. This occurs when the individual or firm has a little or no cash flow, and may occur due to poor cash management. An insolvent individual or firm often declares bankruptcy, or it may arrive at an understanding with creditors in which it restructures payments.


Unable to meet debts or discharge liabilities. Compare solvent.


The condition that exists when (1) one's liabilities are greater than assets,so that a complete liquidation even at fair market value would not pay all debts,or (2) one's current income is not sufficient to pay current bills, resulting in the need to contribute more cash to the organization or default on some payments.

References in periodicals archive ?
103(1) lays down the insolvency rule--that a debtor is insolvent when the sum total of all his liabilities exceeds the fair value of all his assets.
1) A debtor is insolvent if the sum of the debtor's debts is greater than all of the debtor's assets at a fair valuation.
A wealthy Floridian, with significant exempt assets who chooses not to liquidate his exempt assets to pay his creditors, could be insolvent under [section] 726.