Insolvency -

: For businesses, reaching the "zone of insolvency" may shift a director’s duties from shareholders to creditors to protect remaining value.

Insolvency is a financial state where an entity—whether an individual or a business—cannot meet its debt obligations as they fall due. It is characterized by two primary forms: , where there isn't enough liquid cash to pay current bills, and balance-sheet insolvency , where total liabilities exceed total assets. Core Features of Insolvency Dual Definitions : insolvency

: A lack of liquidity to pay debts on time, even if total assets are valuable (e.g., owning a house but having no cash). : For businesses, reaching the "zone of insolvency"