Insolvency may be defined as inability to pay debts or a situation where by the amount of Debt exceeded the value of the Assets.insolvency is often defined in terminological sence as bankruptcy or indebtedness or lack of solvency,many economist evaluate lack of solvency with lack of worthiness’
In corporate law terms, bankruptcy generally means that the organization is unable to pay it’s bills, but even here, there are variety of circumstances Generally, bankruptcy will means that a company has less assets than it’s has liabilities: in order words ,if the assets could be turned into cash would not be sufficient to pay off all the debts when they become due. lt might be said that the company has a negative net worth.
Bankruptcy appears to be a clear notion when we talk about organizations such as companies within a country,as most countries have bankruptcy laws that set down the procedure to handle bankruptcy of companies and similar organizations.But it is completely unclear as to, when do countries go bankrupt,as there are no international laws that handle the situation or are indicative of the same: there are variety of circumstances that could erupt to cause the bankruptcy and a variety of solutions to the problem.