in·​sol·​ven·​cy | \ (ˌ)in-ˈsäl-vən(t)-sē How to pronounce insolvency (audio) , -ˈsȯl- \

Definition of insolvency

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

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Synonyms & Antonyms for insolvency



  • solvency
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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 Many school districts have already been pushed to the brink of insolvency by pension, health care, special education and transportation costs that are rising faster than funding increases. Alexei Koseff,, "California schools fear disaster in Gavin Newsom’s coronavirus budget," 15 May 2020 But the economic shutdown exposed a dangerous flaw in the model: Companies’ revenues can plummet from one month to the next, but their rent obligations typically remain constant, putting many firms in danger of default or even insolvency. Konrad Putzier, WSJ, "Fixed Rent Payments Could Be the Latest Pandemic Victim," 5 May 2020 In New York State, where nearly half a million new claims had been filed in two weeks, the unemployment-insurance trust began to teeter toward insolvency. Nick Paumgarten, The New Yorker, "The Price of the Coronavirus Pandemic," 13 Apr. 2020 Marco Rubio of Florida, chairman of the Senate Small Business Committee and a potential 2024 contender, was the lead Republican negotiator of a bipartisan blueprint to rescue small businesses teetering on insolvency because of the pandemic. David M. Drucker, Washington Examiner, "Republicans targeting 2024 White House bid diverge from Trump on coronavirus," 26 Mar. 2020 Ordinarily, such stresses would indicate insolvency and banks would attempt to collect. The Economist, "Where the bucks stop Can America’s banking system keep cash flowing if activity dries up?," 5 Mar. 2020 Yet as its global network has exploded, so too has Norwegian’s financial problems, which has seen the carrier wobble toward insolvency several times. Mark Ellwood, Condé Nast Traveler, "10 Things That Changed How We Travel in the 2010s," 16 Dec. 2019 While safety-net hospitals are perpetually days away from total financial insolvency, many of the richest hospital systems have millions or billions of investment income tucked away for a rainy day. Libby Watson, The New Republic, "The Intolerable Fragility of American Hospitals," 30 Apr. 2020 Speculative real estate bets even threatened insolvency for one large fund in Dallas. Heather Gillers, WSJ, "U.S. Pension Funds Turn to Riskier Real-Estate Bets," 26 Nov. 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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Time Traveler for insolvency

Time Traveler

The first known use of insolvency was in 1660

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Statistics for insolvency

Last Updated

25 May 2020

Cite this Entry

“Insolvency.” Dictionary, Merriam-Webster, Accessed 25 May. 2020.

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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 How to pronounce insolvency (audio) \
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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