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.

BREAKING DOWN '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.

  1. Deficiency Balance

    The amount owed to a creditor if the sale proceeds from the collateral ...
  2. Notice Of Deficiency

    A notice of deficiency is a legal determination by the IRS of ...
  3. Deficiency Letter

    A letter, issued by the Securities and Exchange Commission (SEC) ...
  4. Deficiency Agreement

    An arrangement in which a party provides a firm with funds to ...
  5. Corporate Debt Restructuring

    Corporate debt restructuring is the reorganization of a distressed ...
  6. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
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  1. What's the Differences Between Chapter 7 and Chapter 11?

    Chapter 7 bankruptcy is sometimes called liquidation bankruptcy, while Chapter 11 bankruptcy is called rehabilitation bankruptcy. Read Answer >>
  2. What happens to the shares of a company that has been liquidated?

    Learn what happens to a company's shares during Chapter 11 and Chapter 7 bankruptcy proceedings, and understand how much ... Read Answer >>
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