Insolvency

Insolvency is when a person or company can't meet their financial obligation to pay their bills on time.

When debt gets behind for the person or company; they would have likely had unforeseen expense,  not handle cash properly, and made a mistake on cash flow projection.

When the person or company realize that bills will be past due. They have now became insolvent. 

When this occur the best option to be upfront with your lenders and vendors of the situation.

It is better to be transparent with the people you do business with to keep goodwill in the relationship. 

They can arrange a better way to adjust the debt to make it less of burden for you to pay off quickly in the long run. Short run they will have to wait to get paid.

Most people in business understand that hardship in finance happen. If you been paying bill consistently in the past. They will give you the time for you to turn your situation around to make payment on the debt.

Some might be reluctant, but will have to accept that cash will not be received any time soon. 

Insolvency doesn't mean bankruptcy, but usually that is the path a person or company goes if the debt can't be paid off.