Principle

Bankruptcy is the state where a collective legal action of receivership or liquidation against a company is necessary.

The state of bankruptcy is specified by a Court of Law as a “legally declared inability or impairment of the ability of an individual or organization to pay their creditors with their remaining assets”. Defining a date of a declared bankruptcy is essential, as all transactions carried out between the official date of bankruptcy and the legal action of receivership’s opening date – considered as the disputable period - are likely to be cancelled.

The legal definition of bankruptcy is also raising accountancy and financial issues in determining both the current liabilities and available assets and to monitor their evolution.

Applicability

 Bankruptcy analysis initiated upon request of the management of the in-debt company.
 Assistance to creditors’ representatives, administrators or liquidators in the process of adjournment of the date of declared bankruptcy.
 Analysis of the company’s receivables,
 Analysis of the company’s financial viability,
 Analysis of liabilities.

Method

Our approach to determine a date of declared bankruptcy for a company encompasses three different aspects that, we think, are complementary with each other:

• An accountancy aspect: current liabilities and available assets are firstly accounting data,
• A financial aspect: The state of bankruptcy is the result of the analysis of the company’s operating cash flow, whose cyclical trends must be appraised.
• An economic aspect: the report must include an analysis of both the economic and structural causes leading to bankruptcy in order to establish a first opinion on the company’s viability.

Results

 Drawing up a financial report,
 Appropriate response to the arguments given by the adverse party,
 Assistance and legal counselling to all parties: the company, the administrator, the creditors and the liquidators during all judicial proceedings .

We helped them :

 Moulinex c/ Brandt, Picogiga