Insolvent | Practical Law

Insolvent | Practical Law

Insolvent

Insolvent

Practical Law ANZ Glossary w-018-6714 (Approx. 2 pages)

Glossary

Insolvent

For the purposes of the Companies Act 1993 (CA 1993), a company is insolvent if it cannot show that:
  • It is able to pay its debts as they fall due in the normal course of business ("cash flow" test).
  • The value of its assets is greater than the value of its liabilities, including liabilities that are contingent on the happening of a future event or events ("balance sheet" test).
For more information on insolvency processes, see Practice note: overviews: