How do you know if a company is in liquidation?
Publié le 23 Aug 2018

How do you know if a company is in liquidation?

The receivership is intended to allow the continuation of the company’s activity , the maintenance of employment and the clearance of liabilities. This procedure establishes a so-called observation period of 12 to 18 months after which the court may resort to a recovery plan, a transfer plan or a judicial liquidation . Judicial liquidation is the court’s last resort, judging that the recovery plan and the disposal plan are insufficient. This last solution implies the total cessation of the activity of the company and its dismantling, as well as the inventory of the assets of the company, their evaluation and fixing of their price and their sale. But what are the signs that a company is in compulsory liquidation?

The state of insolvency or bankruptcy

One of the warning signs of receivership and legal liquidation is the state of insolvency or bankruptcy of the company. This state occurs when a company can no longer repay its payable debts from third parties. More simply, this situation means that the company’s cash cannot meet its payable liabilities, forcing it to file a declaration of cessation of payment with the Commercial Court, which effectively finds the bankruptcy and places the company in receivership. . This declaration then triggers an observation period of 12 to 18 months, depending on the needs, and following the development of a recovery plan or business disposal plan.

The existence of a recovery plan or disposal plan concerning the company

Following the company’s receivership, the Court, with the assistance of professionals and experts, requests the implementation of a recovery plan for the continuity of the company’s activity and reimbursement of third parties. If this plan is not effective, the Court may require a transfer plan or place the company in compulsory liquidation. The Court then asks a liquidator to make an inventory of the company’s assets, to evaluate them and to estimate the sale price. The liquidator then proceeds to the open sale of these assets. These last two options open up possibilities for the company to be taken over by third parties through the acquisition of the company’s assets.

The possibility of business takeover

An unmistakable sign of the compulsory liquidation of a company is the possibility of acquiring it. Indeed, from the transfer plan to the liquidation of the company, third parties can take over a company in compulsory liquidation. However, the Court may request the intervention of professionals for the management and management of the legal transition . However, it should be noted that the takeover of a business involves risks and that no guarantee is given to the purchaser. This is why the assistance of professionals in restructuring and crisis management is essential. Between restoring the confidence of third parties, their reimbursement, as well as the restructuring of the activity and the company, decisions must be taken quickly and efficiently.

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