What is bankruptcy law?
The purpose of bankruptcy law It is to order and conduct insolvency situations, either current or imminent, both for companies and individuals.
It would be a mistake to consider that bankruptcy law only comes into play at the moment when the company or person is in an insolvency situation, in which they can no longer face their debts, since in most cases at that moment it is too late to redirect the situation. On the other hand, bankruptcy advice should be preventive in the company, understanding it as a way to know if the financial and credit situation is suitable or can lead us to the situation previously known as bankruptcy, in such a way that advising the Managers of the Company can be oriented towards the best possible alternative.
How is a bankruptcy procedure?
In this sense, it is necessary to bear in mind that, broadly speaking, the bankruptcy procedure can only end in two ways:
- The first of these is the continuity of the company. In other words, after going through all the phases of the bankruptcy, an agreement with the creditors is approved, the debt and the size of the company are restructured and its activity continues. The company is still "live", having been resized.
- The second way to end the bankruptcy procedure is with the liquidation of the company. This is the assumption that the company arrives at the beginning of the insolvency proceedings in a difficult situation. That is to say, when the situation of the company makes the continuity of its activity unfeasible or when it has taken too long to obtain bankruptcy advice and the procedure has started when the credit situation of the company was impossible to recover. In this case, it is only possible to liquidate the assets that the company still has and thereby settle the debts that are possible, according to the order of priority established by law.
We always try to ensure the continuity of the company
In our performances as appointed bankruptcy administrators by the Commercial Courts, we have found that prior bankruptcy advice, offered by a specialist in these matters, is of great importance to ensure the continuity of the company.
In the same way, only those administrators who have adequate prior legal advice will not have a clear risk of being financially responsible for the insolvency of their company, and as the case may be, make payment of the company's debts to the creditors.
Only when you are fully aware of the situation and take the necessary steps in good time, do you significantly increase your chances of survival.
Other facets of bankruptcy advice
There is another point of view of bankruptcy advice, such as that of the creditor whose client is in bankruptcy and sees the collection of his credit endangered. In this case, it is essential to face the situation with the advice of a specialist. If the amount owed so advises, appear in the bankruptcy procedure and follow the appropriate procedures, it will be key to have possibilities to recover the credit.
Associate lawyer Bankruptcy Law Department