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Simple English definitions for legal terms

insolvency

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A quick definition of insolvency:

Insolvency means that someone or a company owes money to others but cannot pay it back. This can happen when they have more debts than they have money or when they don't have enough money to pay their debts when they are due. It can lead to bankruptcy, which is when a court takes control of the person or company's finances to help pay back the debts.

A more thorough explanation:

Insolvency refers to a situation where a person or company cannot pay the debts they owe. For example, a company may become insolvent when it is unable to repay its creditors on time, which can lead to bankruptcy. There are two main types of insolvency:

  • Balance sheet insolvency: This occurs when a person or company's liabilities (what they owe) exceed their assets (what they own). For example, if a company owes $100,000 but only has assets worth $80,000, it is balance sheet insolvent.
  • Cash flow insolvency: This occurs when a person or company cannot pay their debts as they fall due. For example, if a company owes $10,000 but only has $5,000 in the bank, it is cash flow insolvent.

Insolvency can have serious consequences for a person or company, including bankruptcy and legal action from creditors. However, it is important to note that insolvency is not the same as bankruptcy. Bankruptcy is a legal process that can be used to deal with insolvency, but it is not the only option.

For example, if a person or company is balance sheet insolvent, they may be able to sell assets to pay off their debts. If they are cash flow insolvent, they may be able to negotiate payment plans with their creditors.

Insolvency can also apply to countries. When a country is unable to pay its debts, it is said to be insolvent. However, the legal and political processes for dealing with sovereign insolvency are different from those for individuals and companies.

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babycat
19:43
We sharing Goodreads on here?
1a2b3c4d26z
19:43
jurassic park unironically good
1a2b3c4d26z
19:43
crime and punishment top 1
1a2b3c4d26z
19:43
im okay with being called basic for that one
2big2fail
19:44
im gatekeeping my current book
Dkk
19:44
@2big2fail: looks like an Aristotle wannabe.
2big2fail
19:44
whatever. im just reading the financial times
1a2b3c4d26z
19:44
ft goated
concorde
19:45
I hate Dostoevsky
2big2fail
19:45
studying cloud computing, not the cloud of unknowing
babycat
19:45
@1a2b3c4d26z: serotonin is my fave houellebecq
1a2b3c4d26z
19:45
chefs kiss mwah
2big2fail
19:45
i honestly dont understand why people like houellebecq
1a2b3c4d26z
19:45
I'll try to describe how I feel about him
2big2fail
19:46
my favorite french authors are balzac and proust, as basic as that is
1a2b3c4d26z
19:46
basically I read his book and the whole time I read it I liked it so I finished it and I said hm I liked that book written by the author houellebecq
1a2b3c4d26z
19:46
balzac hahaha
2big2fail
19:46
lost illusions is goated
does it take longer to hear back if u applied to scholarships for schools like ucla???
Dkk
19:47
For Houellebecq I have only read https://en.wikipedia.org/wiki/Atomised
JumpySubsequentDolphin
19:47
you guys should read averroes
also do we think ucla wont do a wave tmw cuz they did a tiny one tonight, can schools do 2 days ina. row
JumpySubsequentDolphin
19:47
perhaps read the incoherence of philosophy first and then read averroes’ response: “the incoherence of the incoherence”
2big2fail
19:47
@Dkk: i read that one. just thought it was boring and not really in touch with reality
JumpySubsequentDolphin
19:47
SPLITTY usually they’re Friday!
Dkk
19:48
@2big2fail: I agree.
HUH then what the heck is this wave tonight ab are they tryna give us an attack???
babycat
19:49
@texaslawhopefully: don’t really remember it but my ibooks library says i read it in 2020. that whole year is a haze.
Dkk
19:51
My favorite book though, The Good Morty: https://archive.org/details/TheGoodMorty
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