When things go wrong
Insolvency & bankruptcy
Also called: Insolvenz · Bankruptcy
When a company can no longer pay its debts as they fall due, and a court-supervised process begins.
A company is insolvent when it can't pay its bills on time or owes more than it owns. In most European countries management must then file for insolvency, and a court appoints an administrator (in Germany: Insolvenzverwalter).
The administrator tries to keep the business running and find a buyer, or sells the assets to repay creditors. Shareholders are last in line and usually receive nothing. The administrator's reports are among the main sources for the “What went wrong” series.
General explanation for education only, not investment advice. Company-specific definitions can differ; each breakdown uses the company’s own.