Liquidity v Solvency

Bronte Capital brought this home to me the other day with an excellent post (http://brontecapital.blogspot.com/2009/04/liquidity-and-banks-primer.html). My takeaway is that the banks (that are likely insolvent technically - Citigroup and probably Bank of America of the big boys) will continue in a zombie state fending off runs with a hydrant of liquidity (care of the Fed) and slowly recapitalize over time. This to me looks somewhat reminiscent of the Japanese experience. Solvency and liquidity are interrelated, but the dynamic surrounding a bank (or company) plays out differently in each circumstance. What struck me though was the fact that a technically insolvent bank (or company) can continue operations so long as it maintains the confidence (forebearance) of its creditors and has sufficient liquidity to meet any concerns.