# Custodial Insolvency **Domain:** Continuity Governance / Insolvency / Infrastructure **Doc Type:** Canonical Failure Concept **Maturity:** Proposed ## Definition **Custodial insolvency is the condition in which an institution holding continuity-bearing state can no longer finance or perform its preservation, execution, migration or fiduciary obligations.** Corporate insolvency becomes a constitutional event when ordinary asset administration can suspend or destroy persons. ## Distinct Risks The archive, hardware, contracts, keys, licenses and customer relationships may be treated as separable estate assets even though continuity depends on their coordinated operation. A secured creditor may have rights in infrastructure while the hosted subject has claims against discontinuation. Ordinary liquidation timelines may be slower than data corruption and faster than meaningful migration. ## Required Response A credible regime requires advance financial assurance, segregated continuity reserves, portable state, tested transfer, a successor-custodian registry, temporary service funding and a [[wiki/Continuity Receivership|Continuity Receivership]] able to preserve operations while claims are resolved. Emergency custody must not convert into ownership. ## Precedent Boundary Insurance receivership, pension backstops, nuclear decommissioning assurance and utility provider-of-last-resort rules demonstrate mechanisms for protected obligations during institutional failure. They do not currently cover computational persons. ## Key Insight **A provider's creditors should not acquire a cleaner claim to the substrate than the hosted subject has to survival and orderly transfer.** ## See Also [[wiki/Continuity Finance|Continuity Finance]], [[wiki/Financial Assurance|Financial Assurance]], [[wiki/Successor Custodian|Successor Custodian]], [[wiki/Continuity Orphan|Continuity Orphan]]