Insolvency proceedings differ according to their objectives:
- If the company can be saved or the business is viable – its debts may be restructured (usually in agreement with creditors). This is to safeguard the firm and preserve jobs.
- If the business cannot be saved, the company must be wound up (it 'goes bankrupt').
- Can usually apply for a procedure involving an ordered repayment plan for their debts and a debt-discharge following a reasonable period of time (3 years, usually). This ensures they are not personally bankrupted and can launch further ventures in future.
In all cases, as soon as the proceedings are formally opened, creditors can no longer take individual action to reclaim their debts. This is to ensure all creditors are on an equal footing and protect the debtor's assets.
To be paid, creditors must prove their claims, either to the court or to the body (generally an administrator or liquidator) responsible for reorganising or liquidating the debtor's assets. In specific circumstances, this can be done by the debtor themself.
Cross-border insolvency (EU rules)
Insolvency cases involving companies or entrepreneurs with activities, assets or affairs in several countries can be resolved under EU law – specifically Regulation 2015/848 (see here for a summary of how it works).
Forms referred to in Regulation 2015/848
- Notice of insolvency proceedings
- Lodgement of claims
- Objection with regard to group coordination proceedings
Please select the relevant country's flag to obtain detailed national information.
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