What does the term 'insolvency' mean under the Revised Corporation Code?

The term 'insolvency' under the Revised Corporation Code specifically refers to a situation where a corporation is unable to pay its debts as they become due. This definition captures the essence of financial distress, highlighting a corporation's inability to meet its short-term obligations. The focus here is on the cash flow and liquidity of the corporation; despite having assets that may exceed liabilities on paper, a corporation can still be considered insolvent if it cannot convert those assets into cash quickly enough to settle its debts.

In contrast, having assets greater than liabilities illustrates a healthy financial position, which directly contradicts the concept of insolvency. The idea of a corporation being profitable but lacking liquid assets reflects a cash flow issue but does not encapsulate the broader definition of insolvency, as profit does not equal liquidity. Lastly, the condition of being in liquidation implies a formal legal process to dissolve the corporation, which may occur after insolvency has been established, but it is not synonymous with insolvency itself. Therefore, identifying the inability to pay debts as they come due is key to understanding the term in the context of corporate financial health.