Asset Deficiency

AAA

DEFINITION of 'Asset Deficiency'

A situation where a company's liabilities exceed its assets. Asset deficiency is a sign of financial distress and indicates that a company may default on its obligations to creditors and may be headed for bankruptcy. Asset deficiency can also cause a publicly traded company to be delisted from a stock exchange.

INVESTOPEDIA EXPLAINS 'Asset Deficiency'

A company that has a chance at recovering financially may file for chapter 11 bankruptcy, under which the company is restructured, continues to operate and attempts to regain profitability. In a worst-case scenario, asset deficiency may force a company to liquidate, in order to pay off creditors and bondholders. The company will file for chapter 7 bankruptcy and go completely out of business. In this situation, shareholders are the last to be repaid, and they may not receive any money at all.

RELATED TERMS
  1. Deficiency

    Conceptually, the numerical difference between the amount of ...
  2. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  3. Asset

    1. A resource with economic value that an individual, corporation ...
  4. Liability

    A company's legal debts or obligations that arise during the ...
  5. Discharge In Bankruptcy

    A permanent order that releases the debtor from personal liability ...
  6. Deficiency Agreement

    An arrangement in which a party provides a firm with funds to ...
Related Articles
  1. Investing Basics

    Reading The Balance Sheet

    Learn about the components of the statement of financial position and how they relate to each other.
  2. Markets

    ROA And ROE Give Clear Picture Of Corporate Health

    Both measure performance, but sometimes they tell a very different story. This is why they’re best used together.
  3. Professionals

    Warning Signs Of A Company In Trouble

    Don't let your clients go down with ship! Learn how to escape sinking with these tips.
  4. The cash conversion cycle (CCC) is one of several measures of management effectiveness.
    Investing Basics

    Understanding The Cash Conversion Cycle

    Find out how a simple calculation can help you uncover the most efficient companies.
  5. Markets

    How To Analyze A Company's Financial Position

    Find out how to calculate important ratios and compare them to market value.
  6. Retirement

    The Essentials Of Corporate Cash Flow

    Tune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself.
  7. Struggling businesses don't always choose bankruptcy. They can try negotiating with creditors directly or liquidating assets outside the U.S courts.
    Entrepreneurship

    Alternatives To Business Bankruptcy

    Bankruptcy isn't the only alternative for a struggling business. It can try negotiating with creditors or liquidating assets outside the U.S courts.
  8. What does bankruptcy means for an individual, how it will affect it in the future with personal finances and what are some way to mitigate its impact
    Credit & Loans

    Bankruptcy Consequences

    You've done the deed and are out from under your debts – or embarked on a repayment plan. What consequences can you expect and how long will recovery take?
  9. Economics

    What is Happening To Atlantic City's Gambling Industry?

    It is quite ironic that Atlantic City, once a bustling seaside resort, home to Miss America Pageant and the inspiration for the iconic “Monopoly” game finds itself in economic doldrums today.
  10. Ways to save on your bankkruptcy filing (attorney fees, thinks you could try to pay less or save more, and any other recommendation a writer with knowledge of bankruptcy has)
    Credit & Loans

    Saving On Bankruptcy Costs

    Going bankrupt is awful enough without worrying about ways to pay for it. Here's how to save on lawyers, filing fees and other inevitable costs.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center