Phase 1 Individual Project

Phase 1 Individual Project

Introduction

The scenario chosen for this project is the “Situation 1”. This scenario is falls under the category of bankruptcy. We will discuss the basic concepts surrounding bankruptcy, and basic legal issues faced by today's business leader will be highlighted.

Discussion

Basic Concepts Surrounding Bankruptcy

A bankruptcy or bankruptcy is a legal situation in which a person (natural person), company or institution (legal persons) cannot meet the payments to be made ??(liabilities), because they are superior to their economic resources available (assets). A natural or legal person who is in a state of bankruptcy is called failed. When the debtor is bankrupt or judicially declared bankrupt, we proceed to a judgment of bankruptcy or insolvency proceedings, which examines whether the debtor can deal with your assets to pay outstanding obligations. It is a widespread insolvency, which differentiates it from mere default. Insolvent is permanent in time. It is a situation of insolvency may be assessed objectively through bankruptcy indexed facts. Insolvent is such that it becomes insurmountable for the debtor.

In the U.S., the bankruptcy process can restructure its liabilities without having to change your management team. The transparency of the process saves in court proceedings, as they can negotiate with creditors and suppliers the terms of restructuring. Adverse effects are that vendors require cash up front that employees seek other firms or rival companies will take away their customers.

Effects of Bankruptcy

The bankrupt is disqualified from managing their property; said administration passed to a third party called the trustee or receiver judiciary. The slope term debts become immediately due and payable. Fixing the rights of creditors, i.e., they cannot improve their situation after the declaration of bankruptcy. They accumulate all pending lawsuits against the debtor failed to before the judge who is hearing the bankruptcy. Creditors lose the right to enforce the debtor failed individually. It gives the debtor bankrupt the right to ask for food to the body of creditors.

Conditions for Bankruptcy

The concept of insolvency gives rise to a certain margin of appreciation because the definition is so constructed and jurisprudence is not clearly described and explained in the law. In practice, there are still differences of treatment on assessing whether the situation of insolvency.

One of the possible positions is estimated that the situation of cessation of payments is where the available assets cannot afford to meet its current liabilities.

Many interpretations of common sense can modulate this rule:

A company that has difficulties but expects a big settlement or a large contract may validly consider that it is not in a situation of cessation of payments;

In the same spirit, the prospect of selling a significant asset (land, plant, subsidiary) with negotiations seriously committed and close to success, can justify postponing a decision on the declaration of insolvency;

Conversely, a worsening financial situation, the unpaid recurring and a declining market with no prospect of improvement can justify the declaration even if assets and liabilities are balanced again.

The date of cessation of payments presents important aspects:

It determines the suspect period: between the date of ...