Its auditors judged that if the transaction went ahead the company would become technically insolvent.
The company insists that it is illiquid, not insolvent, but the size of the loan suggests that its problems go beyond a short-term cash crunch.
Dodd-Frank gives unprecedented power to the Treasury secretary to determine whether an insolvent financial company will be subject to OLA. The Act sets a high standard for invoking the authority, but the process is unnecessarily tainted by the involvement of a political appointee, even if he or she is acting in good faith.
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The scandal erupted last year over the illegal transfer of funds last year from insolvent Bank Bali to a company closely linked to the then ruling Golkar Party.
And the reason that under law a company might have to cease trading immediately is that it is an offence (and a serious one) for the directors to allow the company to keep trading when it is insolvent.
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The company struggled to pay back the money it had borrowed for acquisitions, and rumors spread that it might become insolvent.
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If a limited company becomes insolvent and cannot pay its debts, a liquidator will be appointed to collect and redistribute all the company's assets to the creditors.
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The executive committee of the British Surfing Association (BSA) has declared its limited company insolvent.
The Forte furniture company, founded when Mr. Formanowicz bought an insolvent state-run factory in 1992, exports about 80% of its products, nearly all to countries in the euro zone.
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The move comes after the company struck a deal in principle with its bankers in a bid to avoid becoming insolvent.
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