STUDYING THE ESSENCE OF "ENTERPRISE INSOLVENCY" ECONOMIC CATEGORY

• Main Authors: S. Pustovgar, I. Neskorodeva
• Format: Article
• Language: English
• Published: LLC "CPC "Business Perspectives" 2013-09-01
• Series: Економіка розвитку
• Subjects: enterprise insolvency; bankruptcy; enterprise crisis; technical default; ordinary default; financial condition; financial flows; failure
• Online Access: http://www.ed.ksue.edu.ua/ER/knt/ee133_67/e133nes.pdf

Under the conditions of an unstable economic situation characterized by unprofitability of business entities’ activities, growing number of enterprises subject to insolvency proceedings, special attention is given to the diagnosis of enterprise insolvency.The issues of enterprise insolvency have been studied by many national and foreign scientists, however, the problem of distinguishing between the concept of "insolvency" of an enterprise and the related concepts of "bankruptcy", "ordinary default", "technical default" and "crisis" remains unsolved as they are equated in papers of a number of scientists, which complicates the process of identifying the insolvency status of an enterprise and the stabilization of its financial condition.The article aims at investigating the essence of the concepts which characterize the state of affected solvency of an enterprise and the clarification of their economic sense using the morphological analysis.This article investigates the causes and consequences of violating the solvency of enterprise, the possibility of restoring solvency and functioning of the enterprise for various forms of the solvency violation.The analysis has shown that there are different opinions on the meaning, causes and roles of judicial bodies in the process of bankruptcy of an enterprise. As for the default of an enterprise, this category should be divided into ordinary and technical default, though this division is not applied in most literary sources, including regulatory acts. However, the above-said categories have different essence which preconditions their division and detailed analysis.Bankruptcy and default of an enterprise are defined as the result, a form of a crisis state, the essence of the category "crisis of an enterprise" have been researched.As a result of regulatory acts and scientific work of national and foreign scientists analysis, we have also distinguished the concept of "insolvency" of an enterprise from the related concepts of "bankruptcy", "ordinary default", "technical default" and "crisis", characterizing the violation of solvency. Based on the morphological analysis we have clarified the economic concept of enterprise "insolvency" from the point of view of its essence, causes and consequences.The results of the research can be used for identifying the enterprises’ insolvency in the diagnostics of the enterprises financial condition.