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Insolvency
In its technical sense, a company is insolvent if either it cannot pay its debts as they fall due (the cash flow test) or its liabilities exceed its assets (the balance sheet test).
Failure to meet either of these tests does not necessarily result in the company being wound up but it does give rise to additional duties for directors (see 'wrongful trading') and to the potential for certain transactions entered into (see 'transactions at an undervalue' and 'preference') being subsequently set aside if an insolvency process (such as a winding up or administration) starts during the hardening period.
The expression is sometimes (inaccurately) used to mean the same as winding up.
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