When a company declares bankruptcy, it needs to meet two conditions at the same time: First, the company cannot pay off its debts. Insolvency refers to the objective property situation that the debtor is unable to repay due to the loss of solvency; 2. The company is insolvent or obviously lacks solvency. The so-called insolvency means that the debtor's debt exceeds the actual assets.
Enterprise Bankruptcy Law Article 2 If an enterprise as a legal person is unable to pay off its due debts, its assets are insufficient to pay off all its debts or it obviously lacks solvency, it shall clear up its debts in accordance with the provisions of this Law. An enterprise as a legal person may be reorganized in accordance with the provisions of this law if it has the circumstances specified in the preceding paragraph or obviously loses its solvency.