Business bankruptcies increased 40.4%, from 13,481 to 18,926, from 2022 to 2023, according to statistics released by the Administrative Office of the U.S. Courts. Solvency opinions may help creditors determine whether a liquidating debtor can meet repayment obligations. They also may come into play in fraudulent conveyance, bankruptcy alter ego and due diligence actions. When questions arise about solvency, the parties often call on a business valuation expert for guidance. The basics Solvency is generally defined as a business’s or individual’s ability, at a specific point in time, to meet long-term interest and repayment obligations. To determine whether a business is solvent, both the federal Bankruptcy Code and the Uniform Fraudulent Transfer Act look at the “fair value” of a debtor’s assets. The company (or debtor) is determined...
