Insolvency Services - All You Need To Know

 

Understanding Insolvency.

Insolvency Services is a state of financial distress where an individual or business can no longer pay its debts on time. A company that has taken large loans may face insolvency when it is unable to pay those loans as business slows down or profits dwindle. Insolvency is of two kinds, cash-flow and balance-sheet insolvency, and can happen in either of the two ways or both at once:

 

  • 1. Cash-flow insolvency, which is considered easier to resolve, refers to a situation where the business does not have accessible cash to pay off the debts but does have illiquid assets.

  • 2. Balance-sheet insolvency occurs when your total liabilities are greater than your total assets, whether liquid or illiquid. The standard procedure in such cases is to immediately stop business operations since insolvency law prohibits you from paying some creditors but not others, classed as “trading while insolvent”.


Original source: 

https://www.resurgentindia.com/insolvency-services-all-you-need-to-know

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