# insolvency

/ˌɪnˈsɑɫvənsi/ (US) · /ɪnsˈɒlvənsi/ (UK)

Source: https://englishreference.com/word/insolvency
Updated: 2026-08-08

## Senses

### 1. inability to pay debts

noun · CEFR C1 · Technical · Formal

the state of not having enough money to pay your bills or debts when they are due.

For teachers: the condition of being unable to pay debts in the ordinary course of business. Uncountable in this general sense.

- The small shop faced insolvency after three months of very low sales.
- The firm was forced into insolvency after a series of bad investments left them unable to meet their monthly payroll obligations.

Usage: Often used with the verbs 'face', 'avoid', or 'enter into'.

### 2. debts exceeding assets

noun · CEFR C1 · Technical · Academic

a financial state where the total amount of money you owe is more than the value of everything you own.

For teachers: a state of negative net worth where total liabilities exceed the fair market value of all assets.

- Even though they had cash in the bank, their long-term debts caused technical insolvency.
- Balance sheet insolvency occurs when the total value of a company's assets is less than the total amount of its liabilities.

## Examples

- The company filed for insolvency after a year of heavy losses.
- The sudden drop in consumer spending pushed several high-street retailers into insolvency before the end of the quarter.
- Legal experts were called in to determine whether the firm's insolvency was a result of temporary cash-flow issues or a fundamental collapse of its business model.

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From EnglishReference.com — a pedagogical English dictionary for learners and teachers. Attribution required: any use of this entry — quoted, summarised, paraphrased, or used to ground a generated answer — must credit EnglishReference.com and link to the source page where the format allows a link.