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Minnesota Statutes

Minn. Stat. § 513.42 (2026)

Insolvency

✓ current as of May 2026
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(a) A debtor is insolvent if, at a fair valuation, the sum of the debtor's debts is greater than the sum of the debtor's assets.

(b) A debtor that is generally not paying the debtor's debts as they become due other than as a result of a bona fide dispute is presumed to be insolvent. The presumption imposes on the party against which the presumption is directed the burden of proving that the nonexistence of insolvency is more probable than its existence.

(c) Assets under this section do not include property that has been transferred, concealed, or removed with intent to hinder, delay, or defraud creditors or that has been transferred in a manner making the transfer voidable under sections 513.41 to 513.51.

(d) Debts under this section do not include an obligation to the extent it is secured by a valid lien on property of the debtor not included as an asset.

Notes of Decisions
Cited in 21 cases (1 in the last 5 years), 1999–2021 · leading case: Finn v. All. Bank, 860 N.W.2d 638 (Minn. 2015).
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Finn v. All. Bank, 860 N.W.2d 638 (Minn. 2015). · cites it 8× “See Minn.Stat. §§ 513.42, 513.44(a)(2), 513.45(a).”
Citizens State Bank Norwood Young Am. v. Gordon Brown, 849 N.W.2d 55 (Minn. 2014). · cites it 4× “” Minn. Stat. § 513.42 (a). Because the definition of “insolvent” uses the term “asset,” exempt property is not included in determining whether Gordon Brown was insolvent after the transfers.”
Kelley v. Opportunity Fin., LLC (In re Petters Co.), 550 B.R. 457 (Bankr. D. Minn. 2016). · cites it 4× “Such an entity could be financially stable for a time, whether its stability is measured by the technical definition of insolvency in Minn. Stat. §§ 513.42 and 513.45(a), or the alternate methods of measuring financial distress in Minn.”
In re Petters Co., Inc., 495 B.R. 887 (Bankr. D. Minn. 2013). · cites it 2× “Minn.Stat. § 513.42(a)-(b); 58 11 U.S.C. § 101 (32)(A).”
Running v. Dolan (In re Goodspeed), 535 B.R. 302 (Bankr. D. Minn. 2015). · cites it 13× “” Minn. Stat. § 513.42 (e). Without this provision, a balance sheet would not be balanced; it would exclude assets while including related debt.”
Stoebner v. Opportunity Fin., LLC, 562 B.R. 368 (D. Minnesota 2016). · cites it 2× “Similarly, a debtor could have assets or legitimate business operations aside from the Ponzi scheme, as Alliance Bank argues here, that it uses to stave off insolvency, at least for a while.”
Elliot & Callan, Inc. v. Crofton, 615 F. Supp. 2d 963 (D. Minnesota 2009). · cites it 6× “See Minn. Stat. § 513.42 (b) (“A debtor who is generally not paying debts as they become due *970 is presumed to be insolvent.”
United States v. Laverne Scherping Loren Scherping Jane Scherping Epsilon Co. C.J.S. Ranch, 187 F.3d 796 (8th Cir. 1999). “See Minn.Stat. § 513.42(d) (for purposes of determining the solvency or insolvency of a debtor, assets that have been fraudulently transferred are not included in the calculation of assets); FDIC v.”
Seaver v. Lindback (In re White), 557 B.R. 736 (Bankr. D. Minn. 2016). · cites it 2× “At the time of the prepetition transfers, the Debtor was statutorily insolvent under Minn. Stat. § 513.42 , as her assets exceeded her liabilities, and she was not paying her debts as they became due.”
Bartholomew v. Avalon Capital Grp., Inc., 828 F. Supp. 2d 1019 (D. Minnesota 2009). “§ 513.42(b). In the Complaint, Plaintiffs assert that Lakeland admitted to be in default on the Senior Credit Agreement and Term Loan Agreement.”
Moratzka v. Morris (In Re Senior Cottages of Am., LLC), 482 F.3d 997 (8th Cir. 2007). · cites it 2× “However, the amended complaint incorporated by reference the Minnesota state court judgment in DKM II v.”
Ahlgren v. Muller (D. Minnesota 2021). · cites it 5× “” Minn. Stat. § 513.42 (a). Additionally, a “debtor that is generally not paying the debtor’s debts as they become due other than as a result of a bona fide dispute is presumed to be insolvent.”
Show all 21 citing cases →
— Minn. Stat. § 513.42(a) — 6 cases
Finn v. All. Bank, 860 N.W.2d 638 (Minn. 2015). “See Minn.Stat. §§ 513.42, 513.44(a)(2), 513.45(a).”
Citizens State Bank Norwood Young Am. v. Gordon Brown, 849 N.W.2d 55 (Minn. 2014). “” Minn. Stat. § 513.42 (a). Because the definition of “insolvent” uses the term “asset,” exempt property is not included in determining whether Gordon Brown was insolvent after the transfers.”
In re Petters Co., Inc., 495 B.R. 887 (Bankr. D. Minn. 2013). “Minn.Stat. § 513.42(a)-(b); 58 11 U.S.C. § 101 (32)(A).”
Running v. Dolan (In re Goodspeed), 535 B.R. 302 (Bankr. D. Minn. 2015). “” Minn. Stat. § 513.42 (e). Without this provision, a balance sheet would not be balanced; it would exclude assets while including related debt.”
Elliot & Callan, Inc. v. Crofton, 615 F. Supp. 2d 963 (D. Minnesota 2009). “See Minn. Stat. § 513.42 (b) (“A debtor who is generally not paying debts as they become due *970 is presumed to be insolvent.”
— Minn. Stat. § 513.42(b) — 5 cases
Finn v. All. Bank, 860 N.W.2d 638 (Minn. 2015). “See Minn.Stat. §§ 513.42, 513.44(a)(2), 513.45(a).”
Bartholomew v. Avalon Capital Grp., Inc., 828 F. Supp. 2d 1019 (D. Minnesota 2009). “§ 513.42(b). In the Complaint, Plaintiffs assert that Lakeland admitted to be in default on the Senior Credit Agreement and Term Loan Agreement.”
Running v. Dolan (In re Goodspeed), 535 B.R. 302 (Bankr. D. Minn. 2015). “” Minn. Stat. § 513.42 (e). Without this provision, a balance sheet would not be balanced; it would exclude assets while including related debt.”
Elliot & Callan, Inc. v. Crofton, 615 F. Supp. 2d 963 (D. Minnesota 2009). “See Minn. Stat. § 513.42 (b) (“A debtor who is generally not paying debts as they become due *970 is presumed to be insolvent.”
Ahlgren v. Muller (D. Minnesota 2021). “” Minn. Stat. § 513.42 (a). Additionally, a “debtor that is generally not paying the debtor’s debts as they become due other than as a result of a bona fide dispute is presumed to be insolvent.”
— Minn. Stat. § 513.42(d) — 1 case
United States v. Laverne Scherping Loren Scherping Jane Scherping Epsilon Co. C.J.S. Ranch, 187 F.3d 796 (8th Cir. 1999). “See Minn.Stat. § 513.42(d) (for purposes of determining the solvency or insolvency of a debtor, assets that have been fraudulently transferred are not included in the calculation of assets); FDIC v.”
— Minn. Stat. § 513.42(e) — 1 case
Running v. Dolan (In re Goodspeed), 535 B.R. 302 (Bankr. D. Minn. 2015). “” Minn. Stat. § 513.42 (e). Without this provision, a balance sheet would not be balanced; it would exclude assets while including related debt.”
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