What are the Tests for Insolvency (ie Liquidation) A company will be said to be insolvent if its liabilities either exceed its assets (factual insolvency) or if it cannot pay its debts as and when they fall due for payment (commercial insolvency). The latter is the more appropriate test (and the test used to determine the status of a company or corporation) that very often a company or corporation will be factually insolvent but not commercially insolvent.

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