Prevent bankruptcy with a bankruptcy lawyer

Impending bankruptcy can often be prevented: with a suspension of payments, debt restructuring, or a private agreement via the WHOA, you can give your business breathing room again. It is crucial that you intervene in time and choose the right path. Below, you can read how bankruptcy proceeds, what options are available to prevent it, and when it is better to engage a bankruptcy lawyer.

Many bankruptcies due to economic uncertainty

Economic uncertainty is causing consumers to postpone spending, while businesses are facing more expensive raw materials and rising personnel costs. In early 2023, this led to a striking increase in the number of bankruptcies. TODO_VERIFY: the monthly figures mentioned (such as 301 bankruptcies in January 2023) are snapshots — please check the current bankruptcy statistics if you are using them.

How does a bankruptcy proceed?

If a company is no longer able to pay its bills, the court can declare it bankrupt. In doing so, a trustee is immediately appointed, who:

• investigates whether a restart is possible;
• manages and sells assets to satisfy as many debts as possible;
• takes into account the legal order of priority of creditors (who gets paid first).

Bankruptcies are bad for the economy: many creditors receive nothing or only a portion of their claims, which can cause problems for suppliers as well and trigger a wave of bankruptcies. Therefore, it pays to prevent bankruptcy.

Suspension of payments and debt restructuring

A first option is for a suspension of payments at the court. You will then receive a temporary deferment of payment to get your affairs in order; the debts must ultimately be settled. TODO_VERIFY: the exact duration and conditions of a suspension of payments may change — check the current regulations.

Additionally, you can apply for debt restructuring, during which you create a plan together with a debt counselor to eliminate the debts.

The WHOA: an agreement with your creditors

Sometimes a company is profitable in itself (in the long term), but cannot pay its debts in the short term. In that case, bankruptcy is unfavorable for everyone. Through the Private Agreement Homologation Act (WHOA), you can make agreements with creditors, for example regarding partial debt forgiveness or deferment of payment.

The unique aspect of the WHOA is that not all creditors need to agree. You submit the draft agreement to the judge, and if the judge homologates (approves) it, it also applies to the creditors who did not consent. The judge only approves the agreement if certain conditions are met.

Frequently Asked Questions

How can I prevent bankruptcy?

This can be done, among other ways, through a suspension of payments, debt restructuring, or a private agreement under the WHOA. Which route is appropriate depends on your situation; timely intervention increases the chances.

What does a bankruptcy trustee do in a bankruptcy?

The trustee investigates a possible restart, manages and sells the assets, and distributes the proceeds among the creditors according to the statutory order of priority.

What is the benefit of the WHOA?

You can enforce an agreement with creditors, even if not everyone agrees, provided the court homologates it. In this way, a fundamentally healthy company can avert bankruptcy.

When should I hire a bankruptcy lawyer?

In the event of impending payment difficulties, to explore the options, and if bankruptcy is inevitable, to file for it correctly and protect your interests.

Prevent or file for bankruptcy?

Whether you wish to prevent bankruptcy or need to file for it, swift and expert action is essential. We advise you on the options, guide you through a WHOA process or suspension of payments, and can file for bankruptcy.

View our expertise in insolvency law or schedule a no-obligation intake consultation.