ABSTRACT

The answer to the question ‘When is a company insolvent?’ is not as straightforward as you might think. Firstly, you need to understand what the question is really asking – and that will depend on what answer is required! There are defined events that make a company insolvent and there are subjective judgments that make a company insolvent. When a company goes into liquidation, administration, a company voluntary arrangement (CVA) or has a receiver appointed over it, that company goes on record as being insolvent; it may well, however, have been insolvent for some time before this formal admission.