Betalingsonmacht

Inability to pay is a core concept in insolvency law and denotes a situation in which a natural person or legal entity is structurally unable to meet its payment obligations. The concept serves to establish whether a debtor is in such a financial position that continuation of the business or personal obligations is no longer feasible.

Under the Bankruptcy Act, inability to pay, together with the existence of multiple creditors, constitutes a prerequisite for the declaration of bankruptcy. The court determines whether inability to pay exists on the basis of facts such as unpaid invoices, attachments or non-payment following a formal demand.

In practice, inability to pay is frequently invoked by creditors filing a bankruptcy petition or by the debtor itself when applying for suspension of payments.