Legal Definitions - statement of affairs

A statement of affairs is a financial document that shows the immediate liquidation values of a company's assets and liabilities. It is usually prepared when the company is facing insolvency or bankruptcy.

For example, if a company is in financial trouble and needs to file for bankruptcy, it will prepare a statement of affairs to show its creditors how much money it owes and how much it can pay back. The statement will include a balance sheet that shows the current value of the company's assets and liabilities, rather than their historical costs.

Another example is when a person is going through a divorce and needs to divide their assets and liabilities with their spouse. They may prepare a statement of affairs to show the current value of their assets and liabilities, so that they can negotiate a fair settlement.

In both examples, the statement of affairs is used to show the current financial situation of the company or individual, and to help make important financial decisions.