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What is Insolvency?

If a company or individual is in a situation where they can no longer pay their bills it is referred to as insolvency. This is a precarious situation for any business to be in and if cash cannot be generated quickly to cover debts it can lead to bankruptcy. The main reason why this situation occurs is because debts and liabilities are more than cash flow or available liquid assets. It could be that the company has a lot more assets then debts but if this can’t be turned into cash quickly it could still spend the end for the business. Read the rest of this entry »

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