Legality vs. Bankruptcy: Understand how to appeal in the right way

When we talk about the undertaking, we can not ignore the subject of bankruptcy. Therefore, in this article understand the main aspects related to bankruptcy (bankruptcy) and bankruptcy.

Before starting a new business, the entrepreneur needs to have a basic understanding of management, needs to know the market, and must keep abreast of the latest developments in the industry. But when all this is not enough and business sinks, what can or should it do?

Acquiring this knowledge as soon as possible can help a lot if the company has to face difficult financial times because you already know what to do, what not to do and who to turn to.

 

Bankruptcy: what is it?

Bankruptcy

Bankruptcy is considered when the assets, that is, the set of assets, values ​​and credits of a company, are worth less than the accumulated debts.

In this situation, a judicial process is opened, the normal operation of the company is interrupted and a judicial administrator is in charge of selling the assets and pay off the debts, in the following order:

  • Expenses related to the administration of bankruptcy;
  • Labor expenses;
  • Other creditors (for details see specific legislation).

We see thus that the bankruptcy proceeding concerns the sale of company assets to pay off debts in an attempt to minimize damages to the parties.

 

Legality: what is it?

Legality: what is it?

Bankruptcy occurs when a company is facing financial hardship, but it wants to implement strategies to pay off its debts and stay in the market. If the strategies are accepted by the courts and enforced, but within a certain period the situation is not resolved, bankruptcy is decreed.

A commissioner, who may be a creditor appointed by the judge, follows the bankruptcy proceedings while the company seeks to restore its good financial condition.

However, the Decree Law that provided for the legality was revoked. Now, companies can resort to its equivalent, judicial recovery, which is quite similar.

This measure avoids (often early) bankruptcy of firms as the first alternative in case of instability by giving them the chance to pay off debts later so that there is a focus for a period on keeping the company operating and re-qualifying for to clear debts.

 

Legality or bankruptcy: when to appeal?

Legality or bankruptcy: when to appeal?

Financial difficulties can compromise businesses large or small at different times and contexts, but it can be difficult to recognize the time to take the big step of appealing in any case.

Perhaps a more experienced entrepreneur will find ways to reverse the situation or seek justice soon enough to avoid the aggravation of problems – each case is unique.

But there are a few things to keep in mind: bankruptcy and bankruptcy are different, as are their effects and consequences. It is necessary to understand each alternative and know how to identify what is best for your company, also thinking about how it will be after the closing of legal proceedings. In addition, the court will only accept the request if it is proven the company’s inability to pay off the current debts.

Certainly, no one wants to see their own company going bankrupt. However, there are situations in which resorting to such measures may, in the long run, represent the most appropriate solution for the business. To minimize damages and give chances for the company to restructure financially, we emphasize the importance of knowing how to analyze the results and know the right moment to make decisions.

Did you find the article useful? Do you have any tips on bankruptcy or bankruptcy? Talk to us in the comments section!

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