Due to the current challenges generated by the complicated situations that the entire world is experiencing, such as the pandemic, war, inflation, the very high increase in raw material or energy prices, more and more companies are entering insolvency. <\/p>\n
Insolvency is the situation in which a company no longer has the financial capacity to pay its certain, liquid and due debts to creditors, financial institutions, employees, suppliers or business partners. According to the legislation in force, insolvency can be entered when 60 days have passed since the due date of payments to creditors. <\/p>\n
Many people equate insolvency with bankruptcy, which is not correct. Bankruptcy is the last stage of the insolvency procedure, which a company reaches only if the reorganization plan fails within a period of time imposed by law. <\/p>\n
Insolvency and bankruptcy are two distinct stages, which have a chronological development throughout the insolvency process, namely:<\/p>\n
1. observation period \u2013 is the period between the date of opening the insolvency procedure and the date of confirmation of the reorganization plan or, as the case may be, of entering bankruptcy;<\/p>\n
2. judicial reorganization \u2013 is applied to the debtor in order to pay his debts, according to the schedule of payment of claims. The reorganization procedure involves the preparation, approval, implementation and compliance with a plan, called a reorganization plan, which may provide, together or separately:<\/p>\n
\u2013 operational and\/or financial restructuring of the debtor;<\/p>\n
\u2013 corporate restructuring by modifying the share capital structure;<\/p>\n
\u2013 restricting activity by liquidating some assets from the debtor's assets.<\/p>\n
3. bankruptcy \u2013 the final stage, when either the proposed reorganization plan fails or it has been decided that it is not viable and the company has gone directly to the bankruptcy stage.<\/p>\n
Going bankrupt is the most difficult challenge for a company, because at this stage there is only the possibility of liquidating the company's assets to cover its liabilities, followed by its removal from the Trade Register.<\/p>\n
In bankruptcy proceedings, the valuation concerns all assets in the debtor's estate and is different from that of assets affected by preference clauses, which is done in order to draw up the definitive table.<\/p>\n
During the bankruptcy stage, the assets of the debtor's estate will be evaluated both en bloc and individually. En bloc evaluation considers either the evaluation of all the assets of the debtor's estate or the evaluation of functional subassemblies.<\/p>\n
Insolvency is definitely not a plus in a company's image, but it is also not a situation without a solution. To avoid this situation, every entrepreneur must be circumspect, notice all financial problems in advance, and find solutions to make them profitable and reduce unnecessary expenses.<\/p>\n
Understand the differences between insolvency and bankruptcy and their impact. FairValue offers you the expertise you need to make the right decisions! Discover now!<\/p>","protected":false},"author":1,"featured_media":3134,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[65],"tags":[],"class_list":["post-3133","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"yoast_head":"\n