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Aurora Plastics, Inc. has the following obligations: (1) to suppliers, 800,000 due in 9 days; (2) to a landlord, 300,000 due in 12 days; (3) to a government agency, 100,000 due in 25 days; (4) to a bank, 600,000 due in 60 days. Its assets consist of cash on hand, 400,000; accounts receivable due in 14 days, 900,000; inventory, 1,000,000. Using the definition of insolvent under RA 10142, is Aurora Plastics insolvent? (a) State the definition of insolvent. (b) Apply the definition to these facts and determine whether Aurora Plastics is insolvent. (c) Can a debtor be insolvent even if it has positive net worth? Explain briefly.

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Clara

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