Is it bad to file bankruptcy -File for bankruptcy: Definition
August 5, 2019
Once established, the company must fight to live and survive. The profitability is not always guaranteed and often what is most feared could happen. At this moment, we can hear the term bankruptcy. So what does it mean? Is it bankruptcy? Can the company still cope?
File for bankruptcy: Definition
Former term used to describe the troubles in terms of management of a company. No longer used, except for non-connoisseurs… in fact, each company is required to file for bankruptcy at the registry of the court, each balance sheet appeared.
What is commonly referred to as a bankruptcy filing is in fact called a ” declaration of cessation of payment ” (DCP).
Bankruptcy is a collective proceeding that occurs when a company declares that it is in default, ie when it can no longer meet its debts. click here to visit Bankruptcy Basics for free and learn more about how to file for bankruptcy.
This application for bankruptcy is filed by the manager of the company with the Registry of the Commercial Court. As soon as the company is no longer able to honor its commitments, so-called “insolvency”. A period of 45 days is allowed to file for bankruptcy.
Exceeding this deadline, sanctions can be taken against the manager up to a prohibition to run a business.
It is also possible to note a request for bankruptcy following the report of a creditor. During this period, a conciliation procedure is also possible.
This declaration of cessation of payments leads to either a judicial reorganization or a judicial liquidation following the decision of the court conducted by a liquidator.
What role does justice play in bankruptcy?
Once the application is filed, the courts must first analyze the accounting and financial statement of the company. For this purpose, they have available the accounting and financial documents provided by the head of the company.
Following this analysis, a judicial reorganization or liquidation procedure can be put in place.
What are the consequences of bankruptcy for the company?
The bankrupt company must wait for the decision of the court which will decide, after analysis of the accounting and financial documents, between the judicial reorganization that will allow to restart or the judicial liquidation which will require to put in place a procedure for all sell and pay creditors. In some cases, the company will be maintained as is thanks to the rescheduling of its debt. But this situation remains rather rare and is the subject of a decision of the judge who considers this difficulty as punctual.