An ugly word to the business owner and to its secured lender. A less ugly word to the bankruptcy practitioner, at least until the word “administratively” is attached to it.

Defined by the Code as a financial condition such that an entity’s debts are greater than the fair value of the entity’s property, not including exempt property and not including property transferred, concealed, or removed with an intent to hinder, delay, or defraud the entity’s creditors.

Bankruptcy Code § 101(32). See also Administratively Insolvent, Fraudulent Transfer, Preference.

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