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Insolvency is a term used to describe the inability for a business to pay its debts. When a business racks up more liabilities than assets (ie more debt than money) they are in insolvency. This usually results in bankruptcy.

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βˆ™ 16y ago

Unable to pay debts; bankrupt.

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Q: What is meant by the term insolvency?
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What is meant by the term voluntary insolvency?

Voluntary insolvency, also known as voluntary liquidation, is a type o liquidation or bankruptcy that is supported by the members of the Board of the company and is not forced by Chapter 7 bankruptcy.


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What does company insolvency mean?

The company is a registered artificial person under the companies law. A company mainly consists of Capital, assets, and liabilities. When a company has more liability than its assets required to pay the standing liability then in that sort of situation company either has to declare itself bankrupt or hire professional insolvency experts to legally close down the company under the guidance of professional insolvency expert.


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Functional insolvency refers to a situation where a company is unable to meet its day-to-day financial obligations despite having sufficient assets on its balance sheet. It indicates a mismatch between a company's short-term liabilities and its short-term assets, leading to challenges in sustaining regular operations and payments. Functional insolvency can be a signal of underlying financial distress and may require immediate attention to avoid further financial difficulties.


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