Bankruptcy or reorganization proceedings are initiated when the debtor - which can be an individual or a company - is insolvent. Insolvency exists when the debtor is unable to pay their creditors as they fall due and this is not a temporary situation.
Bankruptcy or reconstruction proceedings can be initiated by the debtor himself or by a creditor who has a claim against the debtor and where the claim is due for payment.
We represent mortgagees and creditors in filing a petition for bankruptcy or reconstruction proceedings, and in this connection we undertake to be appointed by the bankruptcy court as trustee in bankruptcy or as reconstruction administrator.
We also assist insolvent companies that are unable to continue operations in filing their own bankruptcy petition or Restructuring.
During the bankruptcy or restructuring process, we work closely with auditors, auction houses and consultants on the continuation of operations, realization of assets and the subsequent investigations into whether the bankrupt company has made voidable or irresponsible transactions.
We have extensive experience in conducting business transfers from bankruptcy and restructuring estates, among other things:
- Business transfers
- Real estate transfers and real estate project transfers
- Wind-down operations and end-of-life sales
Bankruptcy
Bankruptcy proceedings begin when a company can no longer meet its financial obligations to creditors. This process involves a thorough assessment of the company's assets and liabilities, as well as strategic planning to maximize the value of these assets.
The purpose may be to liquidate or sell the company in order to maximize repayments to creditors. The purpose is to ensure distribution of the proceeds from the sale of the company's assets in accordance with the bankruptcy order and identify opportunities for the continuation of the company's activities that can save both value and jobs.
The steps of the bankruptcy process
- Filing for bankruptcy:
The process begins with a petition, either filed by the debtor himself or by a creditor. This step requires careful legal preparation and detailed documentation of the company's financial status. - Appointment of a liquidator:
The bankruptcy court appoints a trustee who takes over the management of the company's assets. The trustee's task is to ensure the proper and efficient realization of the company's shares. This includes assessing assets and identifying any legal issues that need to be addressed. - Realization of assets:
The trustee converts the company's assets into cash, which may include the sale of property, inventory, and other assets of the company. The proceeds are distributed to the company's creditors to cover the company's debts. - Distribution to secured creditors:
Secured creditors - typically mortgagees - have priority over unsecured creditors in the proceeds of the pledged assets. - Completion of bankruptcy:
Once the assets are realized and the distribution to creditors is completed, the bankruptcy process ends. This results in the complete dissolution of the business, and of the legal entity behind it if the business has been run by a company.
Restructuring
Unlike bankruptcy, where the focus is on realizing the company's assets, Restructuring is a process designed to help a financially distressed company out of a financial crisis without declaring bankruptcy.
By reorganizing and eliminating debt and possibly transferring the company, the aim is to preserve the company's core activities and ensure a sustainable future.
We often collaborate with pledgees and financial creditors on a pragmatic and business-oriented handling of the pledged assets during the reorganization process.
Our approach combines legal expertise with a practical understanding of your business, ensuring that we don't just see solutions, but that all parties and stakeholders around the company get the best out of the situation.
FAQ
The trustee administers the bankruptcy estate, ensures a fair liquidation and distribution of assets to creditors, and examines the company's financial history to identify liability.
Yes, parts of the business can be resurrected either through a sale or a successful restructuring process that gives the business a second chance under new ownership or with a new debt structure.
During a bankruptcy process, it is the trustee's responsibility to manage the employment of employees. If the company is taken over, the employees will typically continue under new ownership. Otherwise, the employees will be terminated and laid off, but they are often entitled to compensation for lost wages etc. through the Employees' Guarantee Fund.
The choice of administrator and trustee is crucial to the success of the reorganization process. They are selected based on their expertise and ability to navigate the company through the reorganization process and provide accounting and financial advice.
