Financial difficulty and insolvency are not the same
A company may face temporary liquidity problems while remaining viable. The assessment should consider payment capacity, assets and liabilities, cash flow and business continuity.
Duty to act in time
When financial problems become systemic, management should objectively assess restructuring, additional financing, creditor arrangements or the need to initiate insolvency proceedings.
Why delay is risky
Delay may increase creditor losses and raise questions about whether management acted reasonably. Decision-making and the information relied upon should be properly documented.
Restructuring as an alternative
Where the business is fundamentally viable, restructuring may preserve operations and enable agreements with creditors. It should be considered before the situation becomes irreversible.
This information is general in nature and does not replace individual legal advice in a specific matter.
Discuss your matter →