What is bankrupt? (Updated 2022)

The complicated situation of the Covid-19 epidemic has greatly affected the production and business of many businesses, both large and small. Many businesses could not continue to operate, on the verge of bankruptcy. So what is corporate bankruptcy? What is considered bankruptcy? All will be answered by ACC through the following article:

balance-sheet-1

What is the concept of corporate bankruptcy?

Business bankruptcy is a commonly used term that does not appear in legal documents, referring to the business’s loss-making situation, which is irreversible. So what is corporate bankruptcy? What does the law say?

Pursuant to Article 2 of the Law on Bankruptcy 2014, an enterprise falling into bankruptcy is an enterprise that is insolvent and declared bankrupt by a court.

Thus, to consider whether an enterprise is in bankruptcy or not, it must be based on two conditions:

  • Insolvency: failure to fulfill the debt payment obligation within 03 months from the payment due date.
  • The court declares bankruptcy, businesses cannot declare bankruptcy themselves.

The classification of bankruptcy is based on the nature of the bankruptcy as follows:

  • Honest Bankruptcy: Bankruptcy caused by real causes
  • Dishonest bankruptcy: A bankruptcy pre-arranged by a business person by deceitful tricks in order to appropriate the creditor’s assets.

Based on the subjects filing bankruptcy declaration:

  • Bankruptcy from the request of the obligor to initiate bankruptcy proceedings
  • Bankruptcy from the request of the obligor to initiate bankruptcy proceedings

Hopefully the above advice has helped you answer the question: what is business bankruptcy? If you have any other questions, please contact and use our ACC consulting service.

What is an enterprise that is declared bankrupt?

An enterprise declared bankrupt is one that is insolvent and has been issued a bankruptcy decision by the court. Not every petition to open bankruptcy proceedings will open bankruptcy proceedings, if not, the enterprise will be declared bankrupt. An enterprise is declared bankrupt in the following cases:

First, the enterprise was declared bankrupt by the Court according to simplified procedures under Article 105 of the 2014 Bankruptcy Law.

Second, when the meeting of creditors is held unsuccessfully,

Third, when the creditors’ meeting passes a resolution proposing to declare the enterprise bankrupt,

Fourthly, the creditors’ meeting passed a resolution with the content of applying procedures to restore business operations, but the enterprise failed to develop a plan to restore business operations within the prescribed time limit or the enterprise failed to implement the business operation recovery plan. business recovery plan.

Hope the above advice has helped you answer the question: what is a business declared bankrupt? If you have any other questions, please contact and use our ACC consulting service.

What is the law on corporate bankruptcy?

The law on corporate bankruptcy is the legal basis for regulating issues related to bankruptcy of enterprises. Corporate bankruptcy is a judicial procedure, governed by the Bankruptcy Law. And the current Bankruptcy Law is the 2014 Bankruptcy Law.

Regarding the governing scope of the enterprise bankruptcy law: order and procedures for filing, accepting and opening bankruptcy proceedings; determination of property obligations and measures to preserve assets during the bankruptcy settlement process; business operations recovery procedures; declare bankruptcy and execute the decision declaring bankruptcy.

Regarding the subject of application of the enterprise bankruptcy law: applicable to enterprises established and operating under the provisions of law, specifically:

  • Private enterprise
  • Co., Ltd
  • Joint Stock Company
  • Partnerships

Regarding the application of the enterprise bankruptcy law

Applied when resolving bankruptcy for enterprises and cooperatives established in the territory of the Socialist Republic of Philippines.
In case an international treaty to which the Socialist Republic of Philippines is a contracting party contains provisions different from those of this Law, the provisions of such international treaty shall apply.
Hope the above advice has helped you answer the question: what is the law on corporate bankruptcy? If you have any other questions, please contact and use our ACC consulting service.

balance-sheet-1

What is corporate bankruptcy?

Business bankruptcy is the process that must be taken to arrive at declaring a business bankrupt. Specifically, this process consists of the following six steps:

Step 1: The person with the right to request the initiation of bankruptcy proceedings shall file a request for the initiation of bankruptcy proceedings at a competent court

Step 2: Processing the petition to open bankruptcy proceedings

Step 3: Open bankruptcy proceedings

Step 4: Meeting with creditors

Step 5: Business recovery

Step 6: The court declares the business bankrupt

Note that business bankruptcy does not always go through all of the six steps above. Simplified procedures for settlement of enterprise bankruptcy shall be carried out by the Court in the following cases:

  • The person who is obliged to request the initiation of bankruptcy proceedings shall file an application but the insolvent enterprise has no money or other assets to pay bankruptcy fees or advance bankruptcy costs;
  • After accepting the petition to open bankruptcy proceedings, the insolvent enterprise has no assets to pay bankruptcy costs.

Frequently asked questions about business bankruptcy

Question 1: What are the legal consequences of declaring corporate bankruptcy?

Bankruptcy of a business is not always the termination of business operations and not all cases of opening bankruptcy proceedings lead to the enterprise being declared bankrupt. Insolvency of enterprises does not necessarily lead to the opening of bankruptcy proceedings; Even when requesting to open bankruptcy proceedings, enterprises still have up to 3 months to negotiate with creditors.

Question 2: How much is the fee for opening bankruptcy proceedings?

The fee for filing a petition for initiation of bankruptcy proceedings is the amount of money that the petitioner for initiation of bankruptcy proceedings must pay in order for the People’s Court to accept the petition for initiation of bankruptcy proceedings. When the company requests to open bankruptcy procedures, the fee for filing a request for opening bankruptcy procedures according to current regulations is PHP 1,500,000.

The following cases are not required to pay court fee advances and are not subject to court fees:

Employees, grassroots trade unions and directly superior grassroots trade unions in places where grassroots trade unions have not yet been established have the right to file a petition to open bankruptcy proceedings upon the expiration of the payment period.
The applicant requests to open bankruptcy proceedings but the insolvent enterprise or cooperative has no money or other assets to pay bankruptcy fees or advance bankruptcy costs.

Question 3: How many methods are there to file a petition to open bankruptcy proceedings?

The person who requests to open bankruptcy procedure must submit the application and enclosed documents and evidences to the competent People’s Court by one of the following methods:

  • Filed directly at the People’s Court;
  • Send to the People’s Court by post.

The filing date of a petition to open bankruptcy proceedings is counted from the date the People’s Court receives the application or the date on which the postmark is posted.

Question 4: Competent authority to handle bankruptcy declaration request?

The agency competent to settle the bankruptcy declaration request is the district-level people’s court where the enterprise’s head office is located. However, this authority belongs to the People’s Court of the province where the enterprise registers its establishment, if it falls into one of the following cases:

  • Bankruptcy case with assets abroad or participants in bankruptcy proceedings abroad.
  • Insolvency enterprises have branches; representative offices in many districts, towns, cities in different provinces.
  • Insolvency enterprises have real estate in many districts; District; town; cities in different provinces.
  • The bankruptcy case falls under the jurisdiction of the district-level People’s Courts, which the provincial-level People’s Courts take up to settle due to the complicated nature of the case.

ACC corporate bankruptcy service

Through the article, you must have answered the question: “What is bankruptcy?” or “What is corporate bankruptcy?” If you have legal problems related to business bankruptcy, please contact and use our ACC business bankruptcy service.

ACC Law Firm – Legal companion with you. With a large staff, experienced and professional working attitude, we always listen to, capture the information provided by our customers, and give dedicated advice on issues related to business bankruptcy.

Leave a Reply

Your email address will not be published.