What is insolvency?

When a financial condition of any business get destabilized in the market and is not in a condition to pay its debts and dues then we can say it as insolvency. Even it can be explained further that when company’s liability exceeds its asset then a company is said to be bankrupt. It is illegal for any company to continue its business in any country, city or state in such bankrupt condition. In this situation generally the shareholders of a company are in loss because they are unsecured creditors for the company. At the time of the liquidation, the company’s equity shareholders are paid in the last because of their unsecured status over the assets of the company.