Insolvency refers to the inability to pay or over-indebtedness of the debtor. The debtor can no longer make its due payments. If the customer is insolvent, insolvency proceedings are opened on petition (e.g. in Austria bankruptcy proceedings, restructuring proceedings with or without self-administration). Upon the opening of insolvency proceedings, an insolvency administrator is appointed by the insolvency court and supervised by that court. The aim of insolvency proceedings is the liquidation or restructuring of the company.
Voiding of pre-insolvency transactions
This refers to the right of the insolvency administrator to void certain transactions (legal acts) of the debtor that were made before the opening of the insolvency proceedings. See also preferential payment insurance.