Types of insolvency settlement
Under the new Insolvency Act insolvency or threatening insolvency can be dealt within one of the following ways:
- bankruptcy,
- reorganization,
- discharge from debts and
- special ways of bankruptcy settlement provided by the law for certain subjects or for certain kinds of cases.
We will suggest the most suitable way of settlement of your situation on the basis of a detailed analysis.
According to § 244 bankruptcy is a way of insolvency settlement, in which the recognized claims of creditors are proportionally satisfied from the revenue from conversion of assets into cash on the basis of bankruptcy declaration, however unsatisfied claims or their parts do not extinguish.
Threatening insolvency – emergency possibilities
Before 2008 Act it was not possible to initiate bankruptcy proceedings until a debtor became insolvent. The new insolvency law makes it possible for a debtor to react already at the time when insolvency is only threatening.
If there is a reasonable belief that you wont be able to repay a substantial amount of your financial debts properly and in time (and thus you are in the state of threatening insolvency), you can i.e. put forward a proposal for declaration of insolvency on your own. The chances for non-liquidation way of insolvency settlement and for its overcoming - especially if you cooperate with your creditors from the beginning and try to reach an agreement – are heightened by this early professional intervention.
Insolvency administrator
The insolvency administrator acts as employer towards debtor’s employees according to § 246, he ensures operation of debtor’s company, accounting procedures and tax duties.
Effects of bankruptcy declaration
Liquidation of a legal person ends by declaring bankruptcy, sequestration ends. We will be glad to go through the other effects of bankruptcy declaration on your entrepreneurship (e.g. on common marital property, right of first refusal, undue debts, mortgage right and others) personally.
If debtor’s property is insufficient to cover the costs of bankruptcy, the court will reject the bankruptcy proposal for insufficient property and at the same time will propose debtor’s erasure from the Commercial register.
