<P> Insolvency in South African law refers to a status of diminished legal capacity (capitis diminutio) imposed by the courts on persons who are unable to pay their debts, or (which amounts to the same thing) whose liabilities exceed their assets . The insolvent's diminished legal capacity entails deprivation of certain of his important legal capacities and rights, in the interests of protecting other persons, primarily the general body of existing creditors, but also prospective creditors . Insolvency is also of benefit to the insolvent, in that it grants him relief in certain respects . </P> <P> In broad and everyday terms, a person is insolvent when he is unable to pay his debts . In legal terms, however, the test for insolvency is whether or not the debtor's liabilities, fairly estimated, exceed his assets, fairly valued . Inability to pay debts is, at most, merely evidence, and in itself, of insolvency . </P>

What does it mean to be insolvent in south africa