The majority of companies are now going through a difficult time, marked by falling sales figures, a constantly falling stock market, failing payments and palpable concerns about the dismissal of employees. Unfortunately, the consequences of these financial difficulties are that a number of companies quickly experience liquidity problems and, if no solution is found, end up insolvent.
The very definition of insolvency is that the debtor is unable to pay his debts on time and that this inability is not only temporary. Should such circumstances prevail, the board members should prepare the company to enter into voluntary bankruptcy. Before the bankruptcy decision is made, however, every entrepreneur should review the alternatives.
On the one hand, the government has announced support measures of various kinds, which you should familiarize yourself with (see separate information on this), on the other hand, you should always reason with your creditors about the possibilities for deferrals, installments, etc. Given the exceptional situation that has arose.
A bankruptcy begins with an application being submitted to the district court within whose catchment area the company has its registered office. You can easily go to the courts agency’s and find out which district court your company belongs to. The district court appoints a bankruptcy trustee who must manage the company’s assets and give the largest possible dividend to the company’s creditors. If it is the company that applies for its own part, the bankruptcy is granted immediately in most cases.
When the bankruptcy trustee has been appointed and the bankruptcy has begun, the company’s most recent board still has some obligations to facilitate the process. Among other things, there is an obligation to provide information regarding everything that can be thought of as important for the bankruptcy process, including information about property located abroad.
You must also attend the meetings called by the bankruptcy trustee and/or the court. The duty of attendance is considered so important that in the absence of the board members, the court can decide on collection and travel bans and, in the worst case, detention. For employees, there is the possibility of receiving certain unpaid wages from the state according to the rules on wage guarantees. The bankruptcy trustee will also handle these matters.
The debtor’s responsibility for the company’s debts
The main rule in a bankruptcy is that a board member is not personally responsible for the company’s debts and thus not obliged to compensate creditors for the losses that may arise. However, as always, there are exceptions to the main rule that are important to know before filing for bankruptcy. In order not to risk personal liability, the following two things should be kept in mind.