Directors know when their Company is insolvent. Months of telephone calls from unsatisfied creditors is a sure sign that getting help from an outside source is required in that situation.
Tough economic circumstances can force the business' activity to contract faster than expenses can be shed to maintain profitability.
The rather obvious conclusion to be reached, and more often than not disregarded once apparent, is that insolvency is imminent and illiquidity will follow shortly thereafter.
In this setting the collection of assets that formed the business are simply items on a fixed asset schedule with a stressed sale market value of about one third of their replacement cost. Their real value is because they integrate into a functioning business that has going concern capability and a wealth creating objective. This ideal can only manifest through the company's human actors and is only likely to be achieved when hard work and good direction prevail. Insolvency is destructive to that ideal.
The depressing aspect of the economic environment that many company’s are battling is that it is highly likely that their business outlook can improve - the Company Directors just need to reach for a paddle.