Half Full – How Insolvency can be to your benefit
A business insolvency isn’t exactly anyone’s idea of fun, but it can also be an opportunity to drastically reduce problems and get your business career back on track faster. Things like a liquidation are sometimes tough calls for business owners, but they do have their uses in terms of removing obstacles. A business insolvency outcome after years of work may not be a sugar-coated happy ending, but it can lead to much better things.
Insolvencies and the law- Basic situations and options
Business insolvency liability in most cases is confined to the business entity, which may or may not include individuals. The process of insolvency resolution includes specific legal situations which deal with a very large range of liabilities. The main object of these processes is to create a viable situation in which creditors are paid.
This process is based on the best business options which can be determined between creditors, the business, and the court. Insolvency practitioners are employed to ensure best practice and proper conduct of the procedures involved in debt management. Solutions may include asset sales, receiverships, and similar administrative measures.
What’s involved in debt resolution, and how does it work?
Debt resolution is a formal process of determining payment of outstanding debts in a fair and equitable way to ensure best results for creditors and reasonable terms for business owners. Either by agreement or by court order, a methodology for repayment of debt, either in part or in full, is determined by the court.
This situation means that liability for payment of debt is assigned according to the court order, or to a binding agreement entered into by the creditors and debtor business. An insolvency practitioner, in some cases appointed by the court, represents the business, and acts to protect the legal rights of the business and business owner in this process.
In cases in which a business is considered to be still commercially viable, a business may trade under the administration of a receiver to achieve this result. In liquidation scenarios, a liquidator conducts a combination of business operations, including trading in some cases, to achieve this outcome.
Know your rights
The big advantage for business owners in terms of insolvency proceedings is that all issues related to the insolvency are covered by due legal process. Liabilities and issues are fully defined. That’s a huge improvement on the possible scenarios in which business owners suffer from situations in which debt piles up to impossible levels, and the only working legal option in some cases is bankruptcy. That’s hardly the best possible result, and it is quite avoidable.
Please note: Circumstances related to business insolvencies can be extremely variable depending on individual situations, and may involve a range of issues related to business owners. The correct insolvency procedures like voluntary liquidation , are definitely the best approach to managing potentially very complex cases.
It’s advisable to check out insolvency options well in advance of any projected problems and to be well aware of your legal rights in such cases. An insolvency practitioner can explain your options, and provide a range of solutions which can turn a grim situation to your benefit.