If a company cannot pay its debts and does not have enough liquidity, it is said to be bankrupt. The idea is not to declare bankruptcy, since there are legal processes to avoid it. If a creditor wishes to recover a portion of what is owed, he can file a bankruptcy petition with the courts against a debtor.
It is important to have knowledge of the activities to be carried out before an insolvency or bankruptcy of the company. The text below tries to expose the highlights so that people know how to act in a legal way.
Financial crisis: how to deal with it?
When a self-employed person or company has many debts and does not have enough assets to face them, it is advisable to declare bankruptcy. Why? The advantage is that it is possible to stop a seizure process, as well as the accumulation of interests. On the other hand, there is the benefit that it can be delayed and even reduce the payment of the debt.
Bankruptcy can be filed through bankruptcy proceedings, however, many companies and individuals are unaware of the concept and how to address it. It is a legal process, which seeks to solve the difficulties in terms of debts and the lack of liquidity of any company. Pursue, then, that creditors can collect, while trying to provide optimal solutions for business continuity and avoid bankruptcy.
But when should the bankruptcy proceedings be requested? The law is very clear about it, who or those who think about this exit must be going through a very complex economic problem. Therefore, the objective is to avoid bankruptcy, to purify it not to affect creditors and so that employees do not see their limited income.
It is convenient to know that there are two types of bankruptcy application, namely:
Voluntary: In this case, the employer or self-employed person in the situation described is obliged to submit the application. It has a term of two months. The consequences of not requesting is that it can lead to fines and criminal charges. The judge can assume that bankruptcy was caused by some dishonorable act.
Convict: As its word indicates, it is when a creditor presents a request to a judge, given that he does not receive payment of the debt. The legal representative will process the request and decide whether or not to proceed.
Legal approach in the management of a financial crisis
Many people confuse insolvency and bankruptcy, which are two closely related concepts that are substantially different:
Insolvency: It is a legal means used to prove it. If a court accepts the allegations, the company or the individual is protected from their creditors. Debt interests are frozen and there is the possibility of renegotiating payments.
Bankruptcy: It is the definitive cessation of the activities and the repeal of the debtor’s assets to pay the creditors.
To face a financial crisis it is necessary to know all the legal details. The objective is to succeed in a bankruptcy process, and in this sense there are people who are specialists in the sector who can face this task. The most viable option is to hire Oklahoma bankruptcy attorneys in interim management format to manage the bankruptcy process, instead of having it as an employee of the company.
The process is defined as the hiring of an experienced staff for a specific situation. It is a flexible option at an affordable cost, and therefore very advantageous. It is obvious that there are a number of tasks to be executed, but experts know that the main thing is not to involve creditors in the crisis and try to save the company, because it has assets and employees that depend on it.
This staff knows perfectly the phases of the contest, knows the documentation that must be obtained to present it along with the application. The important thing is that it is pending in preventing actions that deteriorate the entrepreneur, so the main objective is not to declare bankruptcy, although it is a solution, it is not what is desired.
However, these experts in the interim figure, can achieve the continuity of the company, in the assumption of an unpaid debt. Then, it is preferable to have experts and succeed to get out of the crisis.