Insolvency

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Insolvency

 

the inability of an economic entity such as an enterprise, organization, or other juridical person to ensure paymeny of its fiscal obligations.

In the USSR, enterprises and economic organizations that fail to meet installments on bank loans or omit payments to the state budget and to their suppliers over a prolonged period are classified as insolvent. Insolvency is caused primarily by such shortcomings in economic operations as failure to fulfill production and financial plans or accumulation of excess production stocks. Inadequacies in material-technical supply to the enterprise can also be a cause of insolvency. Delays in receipt of earnings for products sold, unplanned receipt of production stocks, and transportation difficulties can also contribute to insolvency; these are temporary factors independent of the operation of the economic organization.

For capitalist companies, insolvency leads to bankruptcy and to the liquidation of the enterprise; the burden of the unemployment thus caused is ultimately borne by the working people. The socialist state intervenes vigorously in the operation of enterprises that are functioning poorly; while employing economic sanctions and bank audits, it also extends fiscal assistance in order to improve the work of the insolvent enterprise.

O. I. LAVRUSHIN

References in periodicals archive ?
Duncan Swift, deputy vicepresident of insolvency and restructuring trade body R3, said: "The slight rise in corporate insolvencies across 2017 as a whole is a reflection of the difficult year that firms in England and Wales have been through.
The problem with the new areas that feature in the top 10 list is that the number of insolvencies has not been falling quite as fast as it has elsewhere.
The Insolvency Service was cited as saying: "In total, individual insolvencies have generally been on a decreasing trend since 2010.
The economic recovery and any future rise in interest rates is likely to put upward pressure on insolvencies.
This was reinforced by the fact that there were a vastly higher number of personal insolvencies recorded at the height of the financial crisis.
Corporate insolvencies peaked in 2009 for England and Wales.
There were 375 insolvencies in the hospitality and leisure sector in the fourth quarter of 2011 compared to 289 in the same quarter of 2010 according to PwC.
London's Kensington, Wimbledon, Richmond and Chelsea had the lowest concentration of personal insolvencies.
The total number of insolvencies in Austria is seen at 1,637, down 0.
For example, insolvencies triggered by Hurricane Andrew in the early 1990s resulted in nearly 25,000 unpaid claims totaling $500 million.
Inadequate reserves, improper pricing, and unsustainable growth levels were the most significant causes of the 2001 insolvencies, according to Best.
These insolvencies have caused major disruptions in the delivery of health care services to patients and the delay in payments to providers.