The inability of an economic entity – company, individual – to meet its payment obligations when due (situation of a company or individual whose creditworthiness position is so weak that he cannot meet his contractual financial obligations, such as paying interest and principal). However, new money cannot be raised either because of overindebtedness (liabilities exceeding the assets) and thus a lack of creditworthiness. The term insolvency thus corresponds to the legal term insolvency. – For the execution of an insolvency there is a separate procedure, legally defined by the Insolvency Code, namely the insolvency proceedings, which in Germany was called bankruptcy until 1999. Pursuant to Section 18, Paragraph 2 of the German Insolvency Code (InsO), an application for the opening of insolvency proceedings may already be filed in the event of overindebtedness; this is done primarily in order to strive for a possible reorganization. – See liquidation, counterparty risk, arrangement. Bankruptcy, valuation result, crash, debit mass, collection, financial distress, financial oncologist, salary stop, money collection, money squeeze, money spike, insolvency costs, intercreditor agreement, kida, liquidity, liquidity crisis plan, manifestation, distress, financial, parity reservation, bankruptcy, bankruptcy vulture, rescue aid, reorganization, debt sustainability, player bankruptcy, turnaround financing, loss sharing arrangement, priority rule, unconditional, insolvency. – Cf. BaFin’s Annual Report 2003, pp. 81 f. (referring to the EU’s “Recovery and Resolution Directive for Banks” and its transposition into German law), BaFin’s Annual Report 2004, pp. 62 f. (insolvency protection systems) and the respective BaFin Annual Report, Deutsche Bundesbank’s Monthly Report of September 2005, p. 26 (sharp increase in insolvencies among private households in Germany leads to increased valuation expense for banks), BaFin’s Annual Report 2006, pp. 21 f. (overview of corporate and consumer insolvencies), BaFin Annual Report 2007, p. 34 f. (insolvencies since 1999; volume of claims from insolvencies; overviews), BaFin Annual Report 2009, p. 29 f. (corporate insolvencies increased), BaFin Annual Report 2010, p. 31 f. (slight decline in corporate insolvencies), BaFin Annual Report 2011, p. 31 (insolvencies 2002 to 2011; causes), and the respective BaFin Annual Report, chapter “Economic environment.”
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