Insolvency

The state of a person who is unable, from any cause, to pay his debts. Two tests of insolvency prevail, their application generally being governed by the purpose for which the fact of insolvency is ascertained, though there is some confusion in the cases in this respect. Generally, for the purpose of enabling the debtor or his creditors to take advantage of insolvent acts, one is insolvent who is unable to meet his obligations as they accrue in due course of trade, and is unable to proceed in business without making some arrangement with his creditors, without regard to the ultimate sufficiency of his assets in liquidation.

112 Pa. St. 294; 98 Iowa, 321; 86 Me. 246; 3 Gray (Mass.) 600; 116 Mo. 226.

Within the rule relating to conveyances by insolvent persons, it is generally held that one is insolvent whose obligation could not be collected by legal means out of his property.

43 N. Y. 75; 31 Mo. 73.

If one has means from which payment could be enforced, he is not insolvent, even though he is in embarrassed circumstances, and unable to make present payment (136 N. Y. [N. Y.] 632). Property so situated that it cannot be reached by creditors is not to be considered in determining, the issue of solvency (g. v.). Distinction between "insolvency" and "bankruptcy," see "Bankruptcy."