Consolidation – protect against bankruptcy
Based on the legal provisions on consolidation, it can be concluded that in the regulations on bankruptcy and consolidation, the latter is treated as a priority. Before separate provisions on the bankruptcy and consolidation law, entrepreneurs could not use such a large range of corrective or indemnification measures to protect against the collapse of the company. The legal provisions on consolidation are designed to provide more flexibility for entrepreneurs in the area of possible options for the company’s problems.
As part of the regulations regarding the consolidation of companies, you can use a lot of solutions before bankruptcy is declared. This allows you to choose different and optimized solutions. Solutions that can be used include accelerated system management, system and sanation proceedings as well as approval of the system. It can be concluded that the consolidation provisions indicate that consolidation should take precedence over the liquidation process. When the applications for bankruptcy and consolidation are submitted to courts at the same time, they are first and foremost to decide on the recognition of consolidation applications.
Recognition of consolidation applications as having priority means that enterprises will be protected from activities under enforcement proceedings.
This translates into increased opportunities for the debtor to be able to effectively negotiate with contractors. They are aimed at creating such a system or agreement that will allow the company to function.
Getting a deal with creditors does not require that you get an agreement with all creditors. The use of the partial layout allows for the possibility of creating a partial layout. In such a system it is necessary to obtain agreement only with the largest creditors.
When there are temporary problems in a solvency enterprise, you can use much more flexible forms of responding to such problems under the consolidation law. This applies, inter alia, to the lack of criteria, in which failure to pay two invoices within a time could lead to the declaration of the company’s bankruptcy. This allows you to take appropriate consolidation measures well in advance.
In addition, the company may also apply for obtaining public aid, which is aimed at ensuring that the consolidation process is carried out effectively. At the same time, enterprises may also decide to use the assistance of consolidation advisors. The appointment of such an adviser does not take place only in the courts, but the advisor may also be appointed by the creditors as well as the debtors. In specific proceedings, the advisor will be able to, among others, control the activities undertaken as part of consolidation by the debtor. His tasks also include negotiating or closing agreements with creditors.