Filing for bankruptcy – if a company becomes insolvent, it goes into bankruptcy (= insolvency). In the event of insolvency or overindebtedness, a company is obliged to file for bankruptcy immediately. In the event of impending insolvency, a company can file for bankruptcy at its own discretion. When filing for insolvency, insolvency proceedings are initiated which are intended to protect those involved in the company and creditors.
Definition of the bankruptcy petition
According to sportingology.com, the bankruptcy petition is the petition to open insolvency proceedings; it must be submitted to the bankruptcy court. Insolvency proceedings can only be opened after the application has been made. For file for bankruptcy, there is no form of coercion, the insolvency application be made in writing or in the office of the district court to protocol are given. In order for the bankruptcy petition to be filed, there must be a reason for it. In the event of insolvency and over-indebtedness, the insolvency application must be filed within three weeks after this reason became known, otherwise a company is liable to prosecution for delaying insolvency. The fact of the delay in insolvency can only be a partner commit corporation . Sole proprietorships or partnerships, on the other hand, are liable with their private assets. This fact does not exist for them because they cannot endanger any owners (e.g. shareholders) who are not involved in day-to-day operations. In the event of impending insolvency, a company can decide for itself whether to file for bankruptcy. The debtor, i.e. the over-indebted or insolvent company, is obliged to file for bankruptcy. Bankruptcy creditors are also required to file for bankruptcy entitled over the debtor. If a bankruptcy creditor files for bankruptcy, he must prove that he has an outstanding claim against the debtor. Alternatively, he can prove that there is a reason for bankruptcy, for example an unsuccessful attachment or a notification from the debtor about the suspension of payment.
Bankruptcy petition: the bankruptcy process
A bankruptcy application is often preceded by restructuring measures or restructuring negotiations that have failed. There are also frequent unforeseen business developments blame if the company gets into rough waters. Just think of the real estate crisis or the financial crises of recent years. Individual companies did not make any mistakes here, but did not survive the poor economic situation, which they cannot influence. Insolvency does not always mean the end of a company, but it is often also an opportunity to continue running a company or to restructure it fundamentally. A capable insolvency administrator can turn a sick patient into a healthy company that emerges stronger from the crisis. The prerequisite for this is that the bankruptcy application is filed in good time and that the creditors and banks actively help to keep the company alive. The aim of the insolvency proceedings is the equal satisfaction of the creditors. After the application for the insolvency proceedings has been submitted, the insolvency administrator manages the company’s fortunes in cooperation with the company and thus decides on the weal and woe of the company. The bankruptcy process is divided into three sections:
- Filing for bankruptcy and opening insolvency proceedings
- Reporting and examination date
- Settlement and termination of bankruptcy proceedings
Application and opening of bankruptcy
If the insolvency proceedings at the bankruptcy court found is from the bankruptcy judge a preliminary insolvency proceedings recognized an interim insolvency administrator is used. He examines the economic and legal situation of the company and ensures that operations – as far as this is economically possible and sensible – is continued. In this way, jobs can be preserved despite the threat of bankruptcy. Businesses can avail bankruptcy compensation to cover staff costs for up to three months to continue. Remediation can often be initiated during this phase. If the preliminary insolvency administrator has checked the company, he must submit an expert opinion on the possibility of business continuity and restructuring. To open insolvency proceedings , sufficient liquid funds must be available to cover the costs of the proceedings. If these funds cannot be generated, the insolvency proceedings will be discontinued due to lack of funds; the company is at an end.
Reporting and examination date
When the bankruptcy is opened, the competent court sets a reporting date and a subsequent examination date . A final insolvency administrator is elected at the creditors’ meeting. A decision will be made as to whether the company can continue to be economically successful. The examination date serves to examine the outstanding claims of all creditors. Up to this point in time, the creditors can state their claims together with the relevant evidence in a registration form. The reporting date and the examination date are not public. Participate:
- Entrepreneurs as debtors
- Works council (if any)
The bankruptcy, however, is also announced publicly. After the creditors’ meeting, the insolvency administrator manages the company’s fortunes. In this phase it is decided whether a reorganization, a transferring reorganization with the sale of essential company values or a break-up and liquidation of the company will take place. The aim, however, is always to avert a company being broken up. Because this costs jobs and the creditors (especially those with smaller claims) often sit on their bills. These bad debts can even endanger their existence. For this reason, the creditors usually behave very cooperatively during insolvency proceedings, for example by making new deliveries of goods that secure the debtor’s continued business activity.
Handling and termination of the procedure
If the company was reorganized, a transferring reorganization or liquidation was carried out and all registered claims of the creditors were liquidated, the insolvency administrator must inform the court of this in the form of status reports. Every creditor has the right to view or request these status reports. The insolvency administrator must pay the costs and distribute the proceeds to the creditors as a percentage. The procedure ends with a final list and a final invoice to the bankruptcy court. Insolvency proceedings take an average of four to eight years.