The insolvency procedure can be general or simplified. While the general procedure includes judicial reorganization and the attempt to recover – the simplified one means that the debtor goes directly into bankruptcy, but only if he meets certain conditions.
Hammond Partnership Law Firm provides legal services in the area of insolvency, reorganization or bankruptcy.
Participants in the insolvency proceedings:
– The courts
– The tribunal
– Court of Appeal
– The judge
– Judicial administrator – competent natural person, insolvency practitioner, authorized under the law, appointed to exercise the duties provided by law during the observation period and during the reorganization procedure;
– The liquidator – the natural or legal person, insolvency practitioner, appointed to lead the debtor’s activity and to exercise the attributions provided by law within the bankruptcy procedure.
Obligations and risks of employers
Once the insolvency proceedings have been initiated, the debtor employer may terminate the employment contracts of the present employees. This is done only through the administrator or the liquidator. Collective redundancies must be made in accordance with the provisions of the Labor Code. In case of non-compliance, employees can request the cancellation of the dismissal process.
Although it is a common method of managing insolvency, by collective redundancy, the debtor employer risks the cessation of activity and significantly reduces his chances of being able to enter the reorganization process. Therefore, it is very important that the employer always initiates a dialogue with both his creditors and his employees.
How insolvency affects employees
In the event of a company going into insolvency, the wage rights of employees should not be affected. If the institution wants to try to pay its debts by reducing costs and by collective dismissal, the process must take place according to the legal provisions of the Labor Code.
The employer must consider the methods by which to avoid collective redundancies, and the number of dismissed persons to be as small as possible. If, however, redundancies are unavoidable, the insolvent company should mitigate the consequences for former employees by adopting social measures in their favour, such as providing support for retraining.
Insolvency proceedings
– When the insolvency proceedings begin, the court appoints an insolvency practitioner, who acts as judicial administrator.
– After the beginning of the insolvency proceedings, the borrower will no longer be able to dispose of his assets without the consent of the administrator, except for the usual transactions necessary for the debtor and those who depend on him to bear the basic living costs. However, even these transactions must be reported quarterly to the administrator.
– All enforcement proceedings against the borrower are suspended during the insolvency proceedings.
– All debts of the debtor, the money that the borrower has to receive from other parties, become due and must be paid
– The debtor must follow the administrator’s instructions, provide all the information and cooperate with the administrator.
– The owner of the debtor’s residence cannot terminate the lease only because the debtor is insolvent.
In conclusion
Entering insolvency is a difficult and important time for a company, because it risks going bankrupt, in which case the company will be dissolved. For this reason, it is very important for a debtor to be aware of the financial situation of his organization and to notice when the debts become too large to cover them, in order to avoid the aggravation of that situation.
The role of an insolvency and bankruptcy lawyer is to diminish all the negative effects that appear both in the insolvent company, but also on the clients or employees involved in this procedure. In fact, a good insolvency lawyer will analyze in detail the entire financial situation and will implement a strategy for solving the company’s problems.s
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