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 ?
Haslam added: "On the insolvency front, yesterday's Budget saw the Government announce plans to partially restore HMRC's preferential position in insolvencies, a move which could have unintended consequences for insolvency numbers.
The Insolvency Service also said there were 4,308 new company insolvencies in the third quarter of 2018.
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.
The industry is significantly worse off compared to this time last year with a 30% increase in insolvencies in the last quarter of 2011 compared to the last quarter of 2010.
Glenrothes, Kirkcaldy and Livingston have the highest concentration of insolvencies in Britain.
The number of corporate insolvencies will stand at 851 in the first three months of this year and thus be at the level of the pre-crisis years 2007 and 2006.