24 Questions
What is the main characteristic of an insolvent company?
Its assets are not enough to cover its debts.
What is the difference between a company in difficulty and a company in distress?
A company in difficulty may not be in cessation of payment, while a company in distress is.
What is a characteristic of a debt in a situation of cessation of payment?
It is due and payable, not contested, liquid, and monetizable.
What is the purpose of the law of collective procedure?
To allow creditors to reunite and get paid from the company.
What is the primary objective of the Insolvency Law?
To maintain the continuity of the company's operations and settle debts
What does it mean when a company has liquidity problems?
The company has difficulty paying its debts on time.
What is not a sign of financial difficulty in a company?
Increase in assets.
What is the role of the commercial court in the Insolvency Procedure?
To organize the payment procedure and prioritize creditors
What can the shareholders of a company decide on?
The company's identity, operating rules, and transformation options.
What is the condition that determines whether to adopt amicable procedures or treatment procedures?
The company's cessation of payment
What is the role of statutory auditors in internal prevention?
To inform the owners of the company's difficulties through a registered letter
What is not a transformation option for a company?
Appointment of a statutory auditor.
What is the purpose of amicable procedures?
To support businesses and prevent social and economic consequences
What is the first priority of the commercial court in the payment procedure?
Paying taxes to the government
What is the consequence of not resolving the problem internally through internal prevention?
The company is forced to adopt treatment procedures
What is the primary goal of the treatment procedure?
To restore the company's financial health
When can the juridical reorganization procedure be initiated?
When the company is in a state of cessation of payment that is not irreversibly compromised
What is the role of the commercial court in the juridical reorganization procedure?
To supervise the procedure and make decisions
What is a possible outcome of the juridical reorganization procedure?
A continuous plan to recover and settle debts
What is the condition for the business owners to request the juridical reorganization procedure?
The business owners must request it within 30 days following the date of cessation of payment
What happens when the juridical reorganization procedure fails?
The court can decide on the juridical liquidation
What is the purpose of the documents provided by the business owners when requesting the juridical reorganization procedure?
To prove the company is in a state of cessation of payment and the reasons behind it
What is the role of the commercial court in the juridical liquidation?
To supervise the liquidation process and make decisions
What is a condition for the court to decide on the juridical liquidation?
There has been significant deterioration of the company
Study Notes
Insolvency Law
- Insolvency law prevents creditors from taking separate actions against the company and prioritizes payment of debts to various stakeholders.
- The priorities are: government taxes, social organisms, banks, employees, and other companies and creditors.
Objectives of Insolvency Law
- Maintain the continuity of the company's operations
- Maintain employment
- Settle debts and pay creditors
- Restore trust and credibility of the company with its different actors
Solutions for Facing Company's Difficulties
- 2 possible solutions: amicable procedures (non-contentious) and treatment procedures (contentious)
Amicable Procedures
- 2 prevention procedures: internal prevention and external prevention
- Internal prevention: company resolves problems internally using its own knowledge
- Statutory auditors or shareholders must inform owners of financial, economic, social, or legal difficulties within 8 days
- Company can decide on change of identity, operating rules, or transformation options (e.g., increase/decrease in capital, merge with another company, etc.)
Insolvency
- A solvent company is one that can pay its debts through its assets
- An insolvent company is one where available assets are not enough to cover debts
- A company in difficulty faces financial, economic, social, or legal difficulties that could compromise its operations
- A company in distress is in cessation of payment, meaning it cannot pay its creditors due to lack of available assets
- A company in cessation of payment is not necessarily insolvent, as liquidity does not mean solvency
Debt Conditions
- Debt must be: due and payable, not contested, liquid and monetizable, quantifiable, and certain
Collective Procedure
- Law of collective procedure: all creditors reunite to get paid from the company
Juridical Reorganization Procedure
- Conditions: company is in cessation of payment that is not irreversibly compromised, business owners must request within 30 days, and provide documents proving cessation of payment and reasons behind it
- Procedure involves application of collective procedure and can lead to continuous plan, transfer plan, or juridical liquidation
Juridical Liquidation
- The company ends its activity, and the court can decide on juridical liquidation if juridical reorganization fails or cessation of payment is irreversible
Learn about the objectives and priorities of insolvency law, including maintaining company operations and settling debts with creditors.
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