There are many solutions if your company is in financial trouble.
Financial problems do not mean the end of your company
If your company is undergoing financial difficulty that is jeopardizing its business continuity, or if your company finds itself under more financial stress because of the current crisis, this does not necessarily mean you have to stop your business or even go bankrupt.
By seeking legal advice on time, you can actually buy time and remove the financial pressure.
Judicial reorganization offers various solutions
Judicial reorganization is a procedure that can give your company the financial space it needs to enable it to have a stronger, more streamlined way to continue running.
Thanks to judicial reorganization, your company is protected against its creditors. More specifically, you are granted a suspension period (moratorium) during which your creditors are not allowed to take any enforceable measures against your company or file a claim to have your company declared bankrupt or dissolved.
Judicial reorganization can take different forms
Judicial reorganization can take 3 different forms, depending on the specific needs of your company. Concretely, you can apply for judicial reorganization with a view to (i) obtaining an amicable arrangement with your creditors, (ii) obtaining a collective arrangement with them, or (iii) having all or part of the business transferred under judicial authority. Changing the purpose during the procedure is allowed only in specific scenarios and under certain conditions.
The rules of the entire procedure are strict, so seek legal advice on time!
The procedure itself is a formal one whereby deadlines are important and you must, under penalty of inadmissibility, submit a lot of documents. Moreover, ever since May 2018, public auctions that have already been scheduled within 2 months are no longer suspended automatically. In such scenario, you must file an additional application seeking suspension of the auction. You can do this in the same application for judicial reorganization or in a separate application that is filed before the hearing.
If your company is faced with several setbacks that jeopardize its continuity, it is recommended that you seek advice on time so that you can take the necessary steps.
Originally published 31 January 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.