When Insolvent does not mean Insolvency

March 4, 2011

Section 123 of the Insolvency Act 1986 defines insolvency in two ways:

• The “cash flow” test of whether a company is able to meet its liabilities as and when they fall due for payment; and

• The “balance sheet” test of whether the company’s liabilities, including future and contingent liabilities, exceed its assets.

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