2 min read
Definition
Insolvency is the opposite of solvency: a company is insolvent if it cannot pay its debts when due, or if its liabilities outweigh its assets. It does not automatically mean closure, but it triggers heightened duties for directors to act in creditors' interests.
Why it matters
Trading while insolvent can expose directors personally, piercing limited liability. Addressing cash strain early — through better cash flow or restructuring — is how businesses avoid it. See affordability red flags.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.