Bankruptcy law defines bankruptcy as an insolvency liquidation procedure that can be used in the presence of certain prerogatives and whose ultimate goal is the satisfaction of creditors through the liquidation of the assets of a company declared bankrupt. This procedure, therefore, involves both the commercial entrepreneur and his creditors. Being a very complex procedure, it is advisable to rely on a bankruptcy lawyer, who will be able to advise you on the methods and timing with which to have your credit recognized.
If the entrepreneur is aware of the imminent bankruptcy of his company and wants to prevent this from happening, he can resort to three alternatives that allow him to enter into an agreement with creditors: an arrangement with creditors, a company restructuring agreement, or a request for controlled administration. Let's see in detail what these terms refer to.
- An arrangement with creditors is a bankruptcy procedure that a debtor in a state of crisis can resort to in an attempt to restore his business. It takes the form of a judicial agreement with which the creditors and the debtor agree on the methods for extinguishing the obligations contracted.
- A debt restructuring agreement provides for a leaner and shorter debt restructuring procedure, in which the Court's control is purely formal - there is no control over the execution of the agreement - and it does not enter into the merits as in the preventive agreement.
- A request for controlled administration is a bankruptcy procedure that allows an entrepreneur in economic difficulty to continue operating in the market for a maximum of two years, under the control of a judge and a judicial commissioner. The entrepreneur gets a deferment of payments to keep the business.
Currently, the economic crisis that has been going on for several years has led many companies to a corporate crisis. Depending on the severity of the crisis, it is possible to intervene and remedy it in different ways. It is important to react to the first signs of a crisis. However, if these have been underestimated, there are two ways forward: liquidation of the company or turnaround.
What often pushes entrepreneurs to opt for the second option is not only an ethical factor but also a social one: rather than dismissing and liquidating numerous employees, it is possible to give continuity to the organizational structure based on the company's functioning.
The world of insolvency proceedings and bankruptcies is particularly burdensome and full of pitfalls. For this reason, our advice is to contact a bankruptcy law firm in Milan that knows how to carefully examine the company's financial situation and who can develop the best strategy for the specific case. For more detailed advice on the subject, and more, contact the Mazzotta law firm.