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What is insolvency?

Picture of Mark J Smith | MBA, Juris Doctor Founder & Chief Story Teller, CourtList Mark J Smith | MBA, Juris Doctor Founder & Chief Story Teller, CourtList : Updated on December 6, 2023

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Insolvency in general terms, as it relates to a corporation, is the inability to pay debts as and when they become payable.

A company is also insolvent if it is experiencing an 'endemic shortage of working capital' as opposed to a temporary lack of liquidity.

Determining the difference at a point in time during the corporation's life is a question for a court to determine .

Indicators of insolvency include:

continuing losses,
no access to alternative finance,
the inability to raise further equity,
special arrangements with selected creditors,
solicitors' letters or judgments issued against the company,
overdue taxes,
failure to keep books and records, etc.

The list is indicative and not exhaustive.

Companies experiencing any or all the above indicators should book a free consultation by clicking here then where we'll provide you with company specific advice re insolvency in your instance. Alternatively call us on 1300-327123 (till late) or complete the form below.

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