I could be leaping to conclusions, as I'm not an accountant, but isn't that the phrase that distinguishes it from temporary liquidity problems?
Anyway, if people sometimes use insolvency to include illiquidity, that's not helpful in a discussion distinguishing short term problems from long term problems. Maybe it varies with context.
If you don't believe it does, and insist that insolvency includes illiquidity, then the appropriate thing is to find (teach me) a better word, that serves the purpose of excluding it.
Running out of liquidity is one way of becoming insolvent.
Having more liabilities than assets is the other way.
If you think otherwise, go Google the definition of insolvent.
Thanks.
> In accounting, insolvency is the state of being unable to pay the debts, by a person or company, at maturity
> the state of being insolvent; inability to pay one's debts.
> unable to pay debts owed.