Insolvent

Insolvent describes a person, company, or other entity that is unable to pay their debts as they become due or whose liabilities exceed their assets. This financial state often leads to legal proceedings, such as bankruptcy, where assets may be liquidated to satisfy creditors. Insolvency can arise from various factors, including poor financial management, economic downturns, excessive debt, or unforeseen circumstances that disrupt revenue streams. It's a critical indicator of financial distress.

Insolvent meaning with examples

• After years of overspending and poor investments, the once-thriving tech startup became insolvent. They were forced to sell their intellectual property and file for Chapter 7 bankruptcy, leaving employees without jobs and investors with significant losses.
• The prolonged economic recession pushed many small businesses toward insolvency. With dwindling sales and mounting debts, numerous family-owned restaurants were unable to meet their financial obligations, leading to widespread closures.
• Due to a major lawsuit and related settlements, the corporation was declared insolvent. The board of directors struggled to find alternative financing as the legal ramifications and court-ordered damages crippled the company.
• Following a series of unexpected natural disasters, the local insurance provider found itself insolvent. Their reserve funds were depleted by the massive payouts, leaving many policyholders with insufficient coverage.