the.com/insolvency
the math finally catching up to the optimism, with lawyers as referees
means The state of being unable to pay your debts when they come due, because what you owe outweighs what you have or can raise.
from From Latin solvere, 'to loosen, release, pay,' the same root that gives us 'solve' and 'solution' — to settle a debt was to dissolve the obligation binding you. Stick the negating prefix in- on the front and you get the opposite: bound, unable to loosen the knot. So an insolvent person is, quite literally, someone who can't un-tie themselves from what they owe. The word entered English from Latin by way of legal Latin in the 16th–17th centuries, where it has lived among courts and ledgers ever since.
- two flavors
- cash-flow can't pay now, balance-sheet owes more than owns
- ancient roots
- Rome let creditors literally enslave defaulting debtors
- debtors' prisons
- jailing the broke until Dickens-era reform ended it
- corporate twist
- insolvent firms must prioritize creditors over shareholders legally
- zombie firms
- technically insolvent but kept alive by cheap debt
lehman brothers — investment bank that filed for bankruptcy in 2008, triggering the global financial crisis
general motors — filed chapter 11 bankruptcy in 2009 during the automotive industry collapse
thomas cook — 178-year-old travel company that collapsed into insolvency in september 2019, stranding 600,000 customers