What does the term 'Insolvent' mean?

The term 'insolvent' specifically refers to a person or entity that is unable to pay their debts as they become due. This means that when a person or business is insolvent, their liabilities exceed their assets, indicating a state of financial distress. Being insolvent often leads to legal implications, such as bankruptcy proceedings, where the individual or entity seeks relief from their debts under the supervision of the court. Understanding this term is crucial in business law as it has direct implications for creditors, debtors, and the overall financial health of individuals and companies.

The other options describe different contexts that do not relate to the financial definition of insolvency, such as legal status or company documentation. This contextual understanding reinforces the importance of recognizing insolvency's implications in business law and financial management.