Insolvency

Insolvency in United States

Insolvency Definition

The state of a person who is unable, from any cause, to pay his debts. Two tests of insolvency prevail, their application generally being governed by the purpose for which the fact of insolvency is ascertained, though there is some confusion in the cases in this respect. Generally, for the purpose of enabling the debtor or his creditors to take advantage of insolvent acts, one is insolvent who is unable to meet his obligations as they accrue in due course of trade, and is unable to proceed in business without making some arrangement with his creditors, without regard to the ultimate sufficiency of his assets in liquidation. 112 Pa. St. 294; 98 Iowa, 321; 86 Me. 246; 3 Gray (Mass.) 600; 116 Mo. 226. Within the rule relating to conveyances by insolvent persons, it is generally held that one is insolvent whose obligation could not be collected by legal means out of his property. 43 N. Y. 75; 31 Mo. 73. If one has means from which payment could be enforced, he is not insolvent, even though he is in embarrassed circumstances, and unable to make present payment (136 N. Y. 104; 52 Mo. App. 282), or has even been compelled to suspend business (63 Hun[N.Y.] 632). Property so situated that it cannot be reached by creditors is not to be considered in determining, the issue of solvency (g. v.). Distinction between insolvency and bankruptcy, see Bankruptcy.

Insolvency in Foreign Legal Encyclopedias

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Insolvency Insolvency in the World Legal Encyclopedia.
Insolvency Insolvency in the European Legal Encyclopedia.
Insolvency Insolvency in the Asian Legal Encyclopedia.
Insolvency Insolvency in the UK Legal Encyclopedia.
Insolvency Insolvency in the Australian Legal Encyclopedia.

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Insolvency Insolvency in the Family Law Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the IP Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Commercial Law Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Criminal Law Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Antritrust Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Bankruptcy Law Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Constitutional Law Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Tax Law Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the and Finance and Banking Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Employment and Labor Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Personal Injury and Tort Portal of the American Encyclopedia of Law.
Insolvency Insolvency in the Environmental Law Portal of the American Encyclopedia of Law.

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Legal Issue for Attorneys

The state of a person who is unable, from any cause, to pay his debts. Two tests of insolvency prevail, their application generally being governed by the purpose for which the fact of insolvency is ascertained, though there is some confusion in the cases in this respect. Generally, for the purpose of enabling the debtor or his creditors to take advantage of insolvent acts, one is insolvent who is unable to meet his obligations as they accrue in due course of trade, and is unable to proceed in business without making some arrangement with his creditors, without regard to the ultimate sufficiency of his assets in liquidation. 112 Pa. St. 294; 98 Iowa, 321; 86 Me. 246; 3 Gray (Mass.) 600; 116 Mo. 226. Within the rule relating to conveyances by insolvent persons, it is generally held that one is insolvent whose obligation could not be collected by legal means out of his property. 43 N. Y. 75; 31 Mo. 73. If one has means from which payment could be enforced, he is not insolvent, even though he is in embarrassed circumstances, and unable to make present payment (136 N. Y. 104; 52 Mo. App. 282), or has even been compelled to suspend business (63 Hun[N.Y.] 632). Property so situated that it cannot be reached by creditors is not to be considered in determining, the issue of solvency (g. v.). Distinction between insolvency and bankruptcy, see Bankruptcy.

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Notice

This definition of Insolvency is based on The Cyclopedic Law Dictionary. This entry needs to be proofread.

Practical Information

Note: Some of this information was last updated in 1982

The inability to pay debts as they mature. The word is used in two senses: (1) A debtor whose assets exceed his liabilities but who is temporarily unable to meet his obligations as they mature because his assets are not readily convertible to cash, is insolvent in the equitable sense. (2) A debtor whose total assets are less than his liabilities is insolvent in the bankruptcy sense.

(Revised by Ann De Vries)

What is Insolvency?

For a meaning of it, read Insolvency in the Legal Dictionary here. Browse and search more U.S. and international free legal definitions and legal terms related to Insolvency.

Insolvency in State Statute Topics

Introduction to Insolvency (State statute topic)

The purpose of Insolvency is to provide a broad appreciation of the Insolvency legal topic. Select from the list of U.S. legal topics for information (other than Insolvency).

Insolvency (National Banks)

This section introduces, discusses and describes the basics of insolvency. Then, cross references and a brief overview about National Banks is provided. Finally, the subject of Banking Law in relation with insolvency is examined. Note that a list of cross references, bibliography and other resources appears at the end of this entry.

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