Insolvency Test
/ˌɪn.sɒlˈvɛn.si tɛst/
Definitions
- (n.) A legal criterion used to determine whether an individual or entity is insolvent, typically by assessing the inability to pay debts as they mature or by comparing liabilities to assets.
The court applied the insolvency test to decide if the company should enter administration.
Forms
- insolvency test
- insolvency tests
Related terms
See also
Commentary
The insolvency test varies by jurisdiction but commonly includes the cash flow test and the balance sheet test as alternative measures of insolvency.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.