What does illiquid mean?
Illiquidity exists if a debtor is unable to meet its payment obligations as they fall due, such as wages, taxes, invoices and loan instalments (Section 17 (2) of the German Insolvency Code). This may be because the debtor has insufficient liquidity (available money) or because its income is not sufficient to cover its expenses. Illiquidity is a ground for insolvency (Sec. 17 (1) InsO). For corporations, it triggers the duty to file for insolvency.
As a rule, a debtor is to be assumed to be illiquid if it has stopped making payments.
