Corporate Insolvency: A Breakdown in Communication, Not Just a Financial Failure

Is insolvency really just about money? Or is it a deeper systemic failure in communication? According to Niklas Luhmann’s systems theory, organizations don’t collapse simply because they run out of cash—they fail when they can no longer sustain the communication processes that maintain trust, decisions, and operations.

In this thought-provoking analysis, we explore how insolvency disrupts economic, legal, and social systems, why companies are operatively closed and can’t simply be “rescued” from the outside, and how the breakdown of structural couplings with banks, employees, and markets makes collapse inevitable.

Read the full post to rethink corporate crises, leadership, and resilience through the lens of systems theory.