Insolvency clause: Copy, customize, and use instantly
Introduction
An insolvency clause outlines the actions to be taken if either party becomes insolvent, files for bankruptcy, or experiences financial difficulties that affect their ability to fulfill their obligations under the Agreement. This clause ensures that both parties understand their rights and obligations in the event of insolvency, protecting their interests and providing a clear course of action.
Below are templates for insolvency clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard insolvency clause
This version includes basic provisions for insolvency.
In the event that either party becomes insolvent, files for bankruptcy, or is otherwise unable to meet its financial obligations under this Agreement, the non-insolvent party has the right to terminate the Agreement immediately upon written notice. The insolvent party will remain liable for any outstanding payments or obligations incurred prior to insolvency.
Insolvency clause with provision for suspension of services
This version applies to suspension of services.
If [Party A] becomes insolvent or files for bankruptcy, [Party B] reserves the right to suspend services immediately. The suspension will remain in effect until [Party B] is satisfied that [Party A] has resolved its financial situation or provided an acceptable guarantee of payment.
Insolvency clause with provision for termination due to insolvency
This version applies to termination.
Either party may terminate this Agreement if the other party becomes insolvent or undergoes any proceedings related to bankruptcy, reorganization, or liquidation. Termination will be effective immediately upon written notice from the terminating party, and both parties will settle any outstanding financial obligations.
Insolvency clause with provision for remedy after insolvency
This version applies to remedy after insolvency.
If [Party A] becomes insolvent, [Party B] may give [Party A] an opportunity to remedy the situation by providing a plan for restructuring or repayment within [X] days. If no satisfactory plan is provided within the given time frame, [Party B] reserves the right to terminate the Agreement and seek damages.
Insolvency clause with provision for claims in insolvency
This version applies to claims in insolvency.
In the event of insolvency, [Party A] or [Party B] will have the right to file claims in the insolvent party’s bankruptcy proceedings to recover any unpaid sums or damages due under this Agreement. The parties agree to cooperate fully in the submission of such claims.
Insolvency clause with provision for debt repayment schedule
This version applies to debt repayment.
If [Party A] becomes insolvent, [Party B] agrees to work with [Party A] to create a mutually agreed-upon debt repayment schedule. Services will continue, provided that [Party A] meets the agreed payment terms. If the schedule is not followed, [Party B] may suspend services or terminate the Agreement.
Insolvency clause with provision for asset liquidation
This version applies to asset liquidation.
If either party becomes insolvent, they will cooperate in the liquidation of any assets necessary to satisfy the financial obligations under this Agreement. The non-insolvent party will have the right to claim proceeds from the liquidation to cover any outstanding payments.
Insolvency clause with provision for appointment of a trustee
This version applies to the appointment of a trustee.
If [Party A] becomes insolvent, [Party B] may request the appointment of a trustee to manage the performance of this Agreement. The trustee will assume responsibility for ensuring that all obligations are met, including payment of outstanding amounts, and services will continue as agreed upon under the supervision of the trustee.
Insolvency clause with provision for continuation of obligations
This version applies to continuation of obligations.
Even in the event of insolvency, the insolvent party’s obligations to [Party A] or [Party B] will continue unless explicitly waived in writing. All obligations, including payment for services rendered, will remain in force until formally discharged in accordance with insolvency proceedings.
Insolvency clause with provision for protective rights during insolvency
This version applies to protective rights.
In the event of insolvency, the non-insolvent party will have the right to take protective measures, including but not limited to withholding payment, securing assets, or suspending services. These actions will be taken to protect the non-insolvent party’s financial interests under this Agreement.
Insolvency clause with provision for novation of Agreement
This version applies to novation.
If [Party A] becomes insolvent, [Party B] may request that this Agreement be novated to a third party with the agreement of both parties. If novation is not possible, the Agreement may be terminated, and both parties will settle all outstanding financial obligations prior to termination.
Insolvency clause with provision for confidentiality during insolvency
This version applies to confidentiality.
Both parties agree to maintain the confidentiality of all information related to insolvency proceedings, including financial details, settlement negotiations, and communications. No such information will be disclosed to third parties without prior consent, except as required by law.
Insolvency clause with provision for payment of accrued fees
This version applies to accrued fees.
If [Party A] becomes insolvent, [Party B] will be entitled to receive payment for any accrued fees or services rendered up until the date of insolvency. The insolvent party’s remaining liabilities, including accrued fees, will be addressed through bankruptcy or liquidation proceedings.
Insolvency clause with provision for no liability for delay in insolvency
This version applies to no liability for delay.
Neither party will be held liable for delays in performance or failure to meet deadlines resulting from the other party’s insolvency. However, the insolvent party will remain responsible for settling any outstanding debts arising from the Agreement, including payments for services completed prior to insolvency.
Insolvency clause with provision for mutual termination upon insolvency
This version applies to mutual termination.
In the event of insolvency by either party, both parties may mutually agree to terminate the Agreement, and neither party will have any further obligations under the Agreement, except for the payment of any outstanding balances owed up until the termination date.
Insolvency clause with provision for subordination of claims
This version applies to subordination of claims.
In the event of insolvency, the claims of [Party B] under this Agreement will be subordinated to the claims of secured creditors of [Party A]. [Party B] agrees to accept payment after the secured creditors have been paid in full, subject to the outcome of insolvency proceedings.
Insolvency clause with provision for termination for failure to cure insolvency
This version applies to failure to cure insolvency.
If [Party A] becomes insolvent, [Party B] will provide a [X]-day cure period for [Party A] to resolve the insolvency and resume performance under the Agreement. If [Party A] fails to cure the insolvency within the specified time, [Party B] has the right to terminate the Agreement and seek damages.
Insolvency clause with provision for dispute resolution after insolvency
This version applies to dispute resolution.
If a dispute arises due to one party’s insolvency, both parties agree to resolve the matter through mediation or arbitration before seeking other legal remedies. Dispute resolution will proceed as outlined in the Agreement, with the insolvency proceedings being taken into account.
Insolvency clause with provision for effect of insolvency on intellectual property
This version applies to intellectual property.
If [Party A] becomes insolvent, [Party B] retains the right to continue using any intellectual property provided under this Agreement, even if the Agreement is terminated. Any intellectual property rights shall remain unaffected by the insolvency, subject to the terms outlined in the Agreement.
Insolvency clause with provision for immediate termination
This version applies to immediate termination.
In the event that either party becomes insolvent, files for bankruptcy, or enters liquidation, the non-insolvent party may terminate this Agreement immediately upon written notice. Termination will be effective upon receipt of such notice, and all unpaid amounts due up until that point must be settled promptly.
Insolvency clause with provision for continuing obligations
This version applies to continuing obligations.
Notwithstanding the insolvency of either party, the obligations of both parties under this Agreement, including payment obligations, will continue in full force unless specifically modified by mutual agreement or bankruptcy court order.
Insolvency clause with provision for continued performance under supervision
This version applies to continued performance.
If either party becomes insolvent, the non-insolvent party may request that the services continue under the supervision of a court-appointed trustee or administrator. This will be contingent upon the approval of the insolvency proceeding and the trustee’s ability to ensure compliance with the Agreement.
Insolvency clause with provision for suspension and resolution
This version applies to suspension and resolution.
If [Party A] becomes insolvent, [Party B] has the right to suspend all services until a satisfactory resolution of the insolvency has been achieved. [Party B] will work with [Party A]’s representatives or trustee to resolve the matter and determine the feasibility of continuing services under revised terms.
Insolvency clause with provision for restructuring proposal
This version applies to restructuring proposal.
If [Party A] becomes insolvent, [Party B] may request that [Party A] submit a restructuring proposal within [X] days. [Party A] must demonstrate its ability to fulfill obligations under this Agreement, and services will continue if an acceptable plan is provided.
Insolvency clause with provision for impact on existing liabilities
This version applies to existing liabilities.
In the event of insolvency, [Party A]’s liability for any outstanding amounts owed under this Agreement will be addressed in accordance with the insolvency or bankruptcy proceeding. [Party B] agrees to file claims as needed to ensure payment for services rendered.
Insolvency clause with provision for third-party oversight
This version applies to third-party oversight.
Should either party become insolvent, the parties agree to appoint a neutral third-party mediator or auditor to oversee the continuation or termination of the Agreement. The third-party will assess any financial difficulties and help ensure that both parties meet their obligations to the extent possible.
Insolvency clause with provision for enforcement of claims
This version applies to enforcement of claims.
If [Party A] becomes insolvent, [Party B] reserves the right to pursue enforcement of any claims for unpaid amounts, whether through bankruptcy proceedings or other legal remedies available under insolvency law. [Party B] will cooperate in the claims process to ensure payment for services rendered.
Insolvency clause with provision for court approval of contract continuation
This version applies to court approval.
In the event of insolvency, if [Party A] wishes to continue performing under this Agreement, it must seek court approval to do so. [Party B] will consider any court-approved arrangement for continued performance and will not be obligated to continue unless the court affirms such continuation.
Insolvency clause with provision for termination and damages
This version applies to termination and damages.
If either party becomes insolvent, the non-insolvent party may terminate the Agreement with immediate effect. [Party A] or [Party B], as the case may be, will be liable for any damages incurred as a result of the insolvency, including lost profits, if applicable.
Insolvency clause with provision for the appointment of a receiver
This version applies to the appointment of a receiver.
If either party becomes insolvent, a receiver may be appointed to oversee the performance of obligations under this Agreement. The receiver will work with both parties to ensure the terms of the Agreement are carried out, or alternatively, assist with the termination process if the Agreement is deemed unmanageable.
Insolvency clause with provision for non-payment during insolvency
This version applies to non-payment.
In the event of insolvency, [Party A] may temporarily suspend payments for services rendered under this Agreement. [Party B] will be notified, and [Party A] will make reasonable efforts to settle outstanding obligations once the insolvency process is completed.
Insolvency clause with provision for mutual termination and release of claims
This version applies to mutual termination.
If either party becomes insolvent, both parties agree to mutually terminate this Agreement. Upon termination, each party will release the other from any claims or obligations under the Agreement, except for unpaid amounts that remain due up to the termination date.
Insolvency clause with provision for adjustment of terms during insolvency
This version applies to adjustment of terms.
In the event of insolvency, the terms of this Agreement may be adjusted by mutual consent of both parties, subject to any applicable court orders or insolvency regulations. The parties agree to renegotiate the terms to account for the insolvency and ensure the continued viability of the Agreement.
Insolvency clause with provision for immediate right of termination
This version applies to immediate right of termination.
In the event that either party becomes insolvent, the non-insolvent party has the immediate right to terminate this Agreement without further notice or remedy. All outstanding obligations, including payments for completed services, must be settled before termination is finalized.
Insolvency clause with provision for suspension of obligations during insolvency
This version applies to suspension of obligations.
If either party becomes insolvent, all obligations under this Agreement will be suspended until the insolvency proceedings have been resolved. The non-insolvent party will resume its obligations as soon as the insolvency is cleared, unless a new agreement is reached.
Insolvency clause with provision for written notice of insolvency
This version applies to written notice.
In the event of insolvency, the affected party will provide written notice to the other party within [X] days of becoming insolvent. The notice will include details of the insolvency proceedings and a plan for addressing any outstanding obligations under this Agreement.
Insolvency clause with provision for insolvency-driven amendments
This version applies to insolvency-driven amendments.
If either party becomes insolvent, the parties will meet within [X] days to discuss any necessary amendments to the Agreement to accommodate the insolvency. These amendments will be made in writing and must be signed by both parties to be effective.
Insolvency clause with provision for assumption of contract by bankruptcy trustee
This version applies to the assumption of the contract.
If [Party A] becomes insolvent and a bankruptcy trustee is appointed, the trustee may assume this Agreement under the terms outlined here. The trustee must notify [Party B] within [X] days of appointment and must continue performance under the Agreement or seek termination if continuation is not possible.
Insolvency clause with provision for negotiation of new terms
This version applies to negotiation of new terms.
Upon the insolvency of either party, the parties agree to enter into good faith negotiations to amend or modify the terms of this Agreement. This includes adjusting payment schedules, extending deadlines, or making other necessary modifications to reflect the financial circumstances.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.