Insolvency is a financial state in which an individual, business, or organisation is unable to meet its debt obligations as they become due. It generally occurs when liabilities exceed assets, making it difficult or impossible to pay creditors.

Liquidation is the process by which a legal entity is dissolved because the business has become insolvent. The Director/s will apply for Liquidation under the following circumstances: The Business has stopped trading The Business is insolvent, and its Liabilities exceed its Assets.