When liquidity vanishes, Banks quickly become insolvent.
Enterprises’bankruptcy for their financial crisis is the direct factor leading credit capital loss of commercial bank. In the drastic market economy, it is too common to see that many companies become insolvent and escaping debts for their financial crisis.
Where a debtor has become insolvent, a creditor may file a petition with the people's court for the restructuring or the bankruptcy liquidation of the debtor.
It has got to the point where even Deutschebank CEO Josef Ackerman is saying that many major European Banks would become insolvent if they had to mark their sovereign debt to market.
If the buyer goes bankrupt or become insolvent before the payment of the draft, the loss will fall on the seller.
A firm never gets its money because another firm whom they supplied with goods has become insolvent.
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