Solvency refers to the ability of an individual or organisation to meet its financial obligations. It is a measure of financial stability and is often used by lenders and investors to assess the risk of lending money or investing in a particular entity. A solvent entity is one that has enough assets to cover its liabilities and is able to continue operating without the risk of insolvency.
Solvency refers to the ability of an individual or entity to pay off their debts and obligations.
Solvency is determined by comparing an individual or entity’s assets to their liabilities. If their assets exceed their liabilities, they are considered solvent.
If an individual or entity is insolvent, they may be forced to declare bankruptcy or negotiate with their creditors to settle their debts.
Yes, an individual or entity can become solvent again by increasing their assets or reducing their liabilities.
Insolvency refers to the inability to pay off debts and obligations, while bankruptcy is a legal process that allows individuals or entities to discharge their debts and start fresh.
Yes, creditors can take legal action against an insolvent individual or entity to recover their debts.
A bankruptcy trustee is responsible for managing the assets and liabilities of an insolvent individual or entity during the bankruptcy process.
Yes, in some cases, an individual or entity may be held personally liable for their debts if they are insolvent.
Cash flow insolvency refers to the inability to pay debts as they come due, while balance sheet insolvency refers to the situation where liabilities exceed assets.
Yes, in some cases, creditors may petition a court to force an individual or entity into insolvency if they believe it is in their best interest to do so.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 13th April 2024.
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