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Corporate Insolvency: Guide to business continuity.

Written by Corporate
Published 14/06/2024 às 08:13
financial difficulties, insolvency situation
Find out how to deal with business insolvency and ensure business continuity.' – PHOTO: ©2024|Literal Link/b>

Insolvency is declared when a company is unable to pay its obligations, which could lead to bankruptcy. Detect signs and seek solutions with proactive action.

Business insolvency is a delicate situation that can occur when a company is unable to meet its financial obligations. This condition can lead to serious consequences, such as company bankruptcy, if not resolved in time. Therefore, it is essential to pay attention to signs of financial difficulties and seek solutions proactively.

When a company finds itself in a insolvency situation, it is essential to act quickly to reverse the situation. Identify the causes of financial difficulties and seeking viable alternatives to restructure the business are essential steps to avoid bankruptcy. Furthermore, having the guidance of specialized professionals can make all the difference in the company's recovery process.


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Understanding Business Insolvency

In the business world, the financial stability is a crucial point for success and sustainable growth of companies. However, amid the economic crises, it is possible that organizations face financial difficulties that lead to a situation of business insolvency. This scenario occurs when the company is no longer able to meet its financial obligations due to a imbalance between accounts payable and the ability to pay.

Despite directly affecting the liquidity of the business, insolvency also puts its long-term continuity at risk. The regulation of insolvency is mainly carried out by Law 14.12, of 2020, known as the New Bankruptcy Law, which establishes the legal guidelines for the restructuring and recuperação of companies in financial difficulties, as well as the bankruptcy process for those that cannot overcome their debts.

The Importance of the Difference Between Insolvency and Bankruptcy

It is essential to highlight the distinction between business insolvency and bankruptcy. While insolvency occurs when the company does not have sufficient assets to cover its liabilities, requiring a specific legal action to declare it, bankruptcy is the process in which the impossibility of paying debts is recognized, leading to the closure of the company's activities.

To avoid unpleasant surprises, it is essential that entrepreneurs are aware of the precursory symptoms of insolvency. These signs include difficulties in cash flow, increased debt, a drop in sales, late payments and high defaults on the part of customers.

Strategies for Coping with Business Insolvency

Faced with the discovery of insolvency or its precursor symptoms, it is crucial to adopt a proactive and strategic stance to find solutions and avoid the worst outcome. In this sense, it is essential to carry out a thorough financial diagnosis of the company and rely on financial and legal consultants specialized in restructuring.

Negotiating with creditors, presenting payment plans that alleviate the company's cash flow, is another important measure. Judicial recovery can be considered as a last resort, offering the company the opportunity to reorganize its debts under the protection of the law, allowing the continuity of operations.

Business insolvency, although challenging, does not necessarily mean the end of the business. Overcoming difficulties and resuming the path to growth requires transparency, planning and proactive action at the first signs of problems. Entrepreneurs and managers should view the possibility of insolvency as a chance to reevaluate, restructure and revitalize their companies.

Source: © Literal Link

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