The Criteria for Determining the Business Failure

The business failure represents a current problem in any economic and social context and, for this reason, the legislator has been concerned with the regulation of the criteria based on which to accurately determine the failure of a business man when the case. The liquidity test and the balance sheet test, or the insolvency and insolvability are the criteria for determining the business failure usually materialized by undergoing the bankruptcy procedure. The legislator’s option for one or another of these criteria represents a structural option depending on the legal culture of each state however, considering the economic causes and effects of the insolvability and insolvency, that tends to remove the unilateral, exclusivist options. This paper illustrates significant option differences between the criteria for determining the business failure in the member states of the European Union, which is the most used criterion and, if these criteria can be equally used in the banking and insurance sector. Last but not least, the paper illustrates the meanings of insolvency and insolvability in different matters and different laws and the need to eliminate the reserve that the Romanian doctrine manifests towards the insolvability concept as a cause for bankruptcy.