in·​sol·​ven·​cy | \(ˌ)in-ˈsäl-vən(t)-sē, -ˈsȯl-\

Definition of insolvency 

: the fact or state of being insolvent : inability to pay debts

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Synonyms & Antonyms for insolvency


bankruptcy, failure, ruin



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Examples of insolvency in a Sentence

unless the economy improves, many resorts in the area face insolvency

Recent Examples on the Web

In the World Bank’s ease-of-doing-business survey, India’s ranking for resolving insolvencies jumped more than 30 places thanks to the new law. Corinne Abrams, WSJ, "Bankrupt Indian Companies Are Clogging the Economy—but Now the Clock Is Ticking," 1 July 2018 Last year, according to Creditreform, a debt-collection group, Greece saw just 120 company insolvencies. The Economist, "A critical task for the Greek economy enters a new phase," 29 May 2018 Central States Pension Fund, the largest, faces insolvency by 2025 and would leave more than 30,000 Missourians without the monthly pension checks they were promised. Edward Mckinley, kansascity, "KC union retirees join rally in Ohio for pension fix — or is it a bailout?," 13 July 2018 In that difference, in the amount of available assets above Lehman’s borrowing needs, Ball makes the case that this was a liquidity problem, not an insolvency problem. San Antonio Express-News, "When Lehman failed," 29 June 2018 Later in the meeting, school board member George McKenna put forward a plan to try to slow or even reverse the district’s projected slide toward insolvency. Howard Blume,, "L.A. school board approves $8.2-billion spending plan amid concerns over future," 20 June 2018 Mendelson believes his opponent is peddling easy answers and understating the precarious state of the city’s finances, which are governed by a set of rules put in place after the District teetered on insolvency in the 1990s. Fenit Nirappil, Washington Post, "Why this D.C. Council race is a proxy fight over the city’s future," 11 June 2018 That may condemn crucial corporations to insolvency, and perhaps force the government to seek a rescue from the International Monetary Fund, a course that would surely entail painful spending cuts. New York Times, "Turkey’s Economy Is So Hot That It May Face a Meltdown," 10 July 2018 More than 300 such plans across the country are at risk of insolvency. Washington Post, "Thousands rally in Ohio for solution to pension crisis," 12 July 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'insolvency.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of insolvency

1660, in the meaning defined above

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Last Updated

10 Nov 2018

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Time Traveler for insolvency

The first known use of insolvency was in 1660

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More Definitions for insolvency



Financial Definition of insolvency

What It Is

In most usages, insolvency is the inability of a company or individual to meet its financial obligations as they come due. In the legal sense of the word, an entity is considered insolvent if its total liabilities exceed its total assets.

How It Works

Entities most commonly become insolvent by taking on too much debt. For example, a company with a heavy debt load may find itself unable to cover its debt liabilities should its business slow.

In this case, the company must raise capital to pay its obligations via selling assets, borrowing, or somehow raising capital and/or reducing expenses.

If a company cannot meet its obligations, it may be forced to file for bankruptcy.

Why It Matters

Insolvency in public companies may continue to trade while restoring their financial health, but represent some of the riskiest investments on the market. Insolvency is a red flag for investors since it can lead to bankruptcy or the evation of assets in order to meet debt payments.

Source: Investing Answers


in·​sol·​ven·​cy | \in-ˈsäl-vən-sē \
plural insolvencies

Legal Definition of insolvency 

1 : the fact or state of being insolvent — compare bankruptcy

2 : insufficiency (as of an estate) to discharge all enforceable debts

Note: Insolvency matters are covered under the Bankruptcy Code.

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