Declaration of Solvency

A Declaration of Solvency is a formal statement made by a company’s directors, confirming that the company is financially stable and can pay its debts as they become due. Generally, it is used in situations like company liquidation or reorganizations, where directors assure stakeholders that the company has the resources to cover its obligations. This declaration helps build trust with creditors, employees, and investors by ensuring transparency about the company's financial health. It is an important legal document that reflects the company's solvency status at a specific moment in time.