Meaning of insolvency United Kingdom insolvency law
most insurance companies , banks insolvent if policy , account holders required payments @ once. instead, main test of insolvency whether company can pay debts fall due. the meaning of insolvency matters type of legal rule. in general terms insolvency has, since earliest legislation, depended upon inability pay debts. concept embodied in insolvency act 1986 section 122(1)(f) states court may grant petition company wound-up if company unable pay debts . general phrase is, however, given particular definitions depending on rules insolvency relevant. first, cash flow test insolvency represented under section 123(1)(e) company insolvent if company unable pay debts fall due . main test used rules. guides court in granting winding-up order or appoints administrator. cash flow test guides court in declaring transactions company avoided on ground @ undervalue, unlawful preference or created floating charge insufficient consideration. cash flow test said based on commercial view of insolv...