What is insolvency?

Neosolvency is generally defined as a financial status in which the company can no longer apply its accounts and other obligations in time. This occurs whenever obligations or debts exceed assets and cash flow. Once the company becomes insolvency, it must take immediate action to create cash and settlement or re -negotiation of current debts. Companies that cannot be successfully pulled out of this state often face bankruptcy, admission procedure or liquidation of all assets. Both conditions are dealt with by obligations exceeding assets, but the insolvency is the state of being and bankruptcy is a matter. Companies can be insolvent, but not legally bankruptcy. Insolvency can lead to bankruptcy, but the situation may also be temporary and repairable without legal protection against creditors. Using existing credit lines for lending money is one way to avoid them, but also creates greater responsibility and new payment periods. Sale of assets to other companiesIt is also a common security against the condition. For example, consumers may notice a local grocery store. The original chain of grocery store may be approaching insolvency and selling 30 or 40 local stores to generate immediate cash for timely debt repayment.

Another way to avoid insolvency is the acquisition of greater corporation. It is not uncommon for the main conglomerates to find small but commercially viable society for management or takeover. Although a smaller company is currently flirting with insolvency, the rights to its product series signature may prove to be sufficiently valuable to save it from a financial ruin. This happens quite often in the wholesale food industry. Goting manufacturers from a popular product can agree to sell all their assets with better financing.

InabilityThey do not necessarily lead to bankruptcy, but all bankruptcy companies are also considered insolvent. Once the insolvency is announced, shareholders may have to decide whether to sell their shares or stay in the company until it is able to regain their financial position.