insolvency
noun
, -ˈsȯl-\
Definition of insolvency
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Examples of insolvency in a Sentence
Recent Examples on the Web
For example, it can be invoked if a district is on the verge of insolvency or if a district could be pushed into deficit spending by a new charter. — Howard Blumestaff Writer, Los Angeles Times, "Charter school compromise could intensify L.A.'s school board battles," 3 Sep. 2019 The Peralta Community College District of 50,000 students at four East Bay campuses is at high risk of insolvency after years of mismanagement that had administrators regularly breaking their own rules, says a dire new fiscal review. — Nanette Asimov, SFChronicle.com, "‘High risk of insolvency’ for troubled Peralta Community College District," 25 July 2019 That perspective takes into account the massive amounts of income-tax revenues that will be funneled into Social Security in the years leading up to its insolvency. — Andrew G. Biggs, National Review, "How the Democrats’ Social Security Plan Could Finance a Tax Cut," 15 Aug. 2019 County education officials confirmed to The Times on Monday that the school district is on the brink of insolvency, with insufficient reserves to pay its bills, according to a May 31 analysis. — Howard Blume, latimes.com, "Ex-school district leader found dead two months after stepping down amid questions," 10 June 2019 The board said billions of dollars of alleged overpayments from 2002 to 2015 led in part to the power company’s insolvency and caused it to slide deeper into debt, noting that fuel oil purchases are its single largest expense. — Danica Coto, SFChronicle.com, "Puerto Rico oversight board accuses oil companies of fraud," 1 July 2019 Fiscal review: The Peralta Community College District of 50,000 students at four East Bay campuses is at high risk of insolvency after years of mismanagement. — Jen Thomas, SFChronicle.com, "Bay Briefing: Feeling at home while at school," 26 July 2019 The English Football League have announced that Bury are set to begin the 2019/20 season with a 12-point deduction following insolvency. — SI.com, "EFL Confirm Bury Will Start 2019/20 Season With 12-Point Deduction Following Insolvency," 18 July 2019 Most of their revenues are in lira, a potentially lethal mismatch that threatens insolvency. — Peter S. Goodman, New York Times, "For Erdogan, the Bill for Turkey’s Debt-Fueled Growth Comes Due," 24 June 2019These example sentences are selected automatically from various online news sources to reflect current usage of the word 'insolvency.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
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More Definitions for insolvency
insolvency
nounFinancial Definition of insolvency
What It Is
In most usages, insolvency is the inability of a company or individual to meet its financial obligations as they come due. In the legal sense of the word, an entity is considered insolvent if its total liabilities exceed its total assets.
How It Works
Entities most commonly become insolvent by taking on too much debt. For example, a company with a heavy debt load may find itself unable to cover its debt liabilities should its business slow.
In this case, the company must raise capital to pay its obligations via selling assets, borrowing, or somehow raising capital and/or reducing expenses.
If a company cannot meet its obligations, it may be forced to file for bankruptcy.
Why It Matters
Insolvency in public companies may continue to trade while restoring their financial health, but represent some of the riskiest investments on the market. Insolvency is a red flag for investors since it can lead to bankruptcy or the evation of assets in order to meet debt payments.
Source: Investing Answers
insolvency
noun
\
Legal Definition of insolvency
Note: Insolvency matters are covered under the Bankruptcy Code.
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