Liquidity is a temporal issue. Your assets could be bigger than your liabilities, but you just don't have enough cash and equivalents.
Solvency is just a dead end. And then my question: "Any way for dealing with solvency crisis? or your only option would be to have a BS properly hedged against such kind of crisis?"
Thanks for the comment. As far as I am aware if a company is insolvent, it will usually have to go through bankruptcy proceedings, like FTX is doing. Since insolvent companies' liabilities are greater than their assets, lenders usually won't lend them cash...
Good point.
Liquidity is a temporal issue. Your assets could be bigger than your liabilities, but you just don't have enough cash and equivalents.
Solvency is just a dead end. And then my question: "Any way for dealing with solvency crisis? or your only option would be to have a BS properly hedged against such kind of crisis?"
Thanks for the comment. As far as I am aware if a company is insolvent, it will usually have to go through bankruptcy proceedings, like FTX is doing. Since insolvent companies' liabilities are greater than their assets, lenders usually won't lend them cash...