How to determine the insolvency of a limited company

Legal analysis: when a company has foreign debts, if the company's assets are not enough to pay off all the foreign debts, it can be considered insolvent. There is no need to consider the company's credit and ability when determining insolvency. When insolvent enterprises can pay off their due debts and have enough cash to maintain their daily operations, they will not enter bankruptcy liquidation procedures. Therefore, insolvency will not necessarily go bankrupt, and there is the possibility of continuing to operate.

Legal basis: Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People's Republic of China (I).

Article 1 If the debtor is unable to pay off the debts due and has any of the following circumstances, the people's court shall determine that he has bankruptcy reasons:

(1) The assets are insufficient to pay off all debts;

(2) the obvious lack of solvency.

The people's court will not support the claim that the debtor has no bankruptcy reasons on the grounds that the person who is jointly and severally liable for the debtor's debts has not lost his solvency.