Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics
Corporate insolvencies worldwide - Statistics & Facts
Simply put, insolvency happens when a business is not able to pay its debts. When a company is not able to locate funds to pay debts that are due, for example through taking on additional debt, it can legally file for bankruptcy. The company is then dissolved, and its assets are sold, usually by a third party such as a law firm, with the money received being divided between the company’s creditors. As a rule, creditors do not receive the full amount they are owed when a company files for bankruptcy. In most countries, a condition for filing for bankruptcy is that the company’s assets are not sufficient to cover the total amount of debt they owe. It is often the case that the outstanding debt is much higher than the value of the underlying assets.
