Don’t get shortchanged by a liquidating business - Crawford Ellenbogen

If your business is a creditor of a liquidating company, you may have trouble getting back what you’re owed. It can help to get a solvency opinion, which determines whether the company could meet its long-term interest and repayment obligations when it made (or didn’t make) creditor payments. Experts apply three tests to the subject: 1) At the time of the transaction, did its value exceed its liability value? 2) Did it incur debts that were beyond its ability to pay? and 3) Does it have enough capital to survive in the normal course of business? Companies generally are considered solvent if they pass all three tests.