The final breath of a company: judicial liquidation
When a company finds itself in a critical financial situation, it may be forced to resort to judicial liquidation. This procedure, provided for by law, allows the activity of the company to be terminated by ceasing its payments and selling its assets to repay its creditors. It is the last resort for a company in difficulty, but it is also a difficult time for the managers, employees, and partners of the company.
The stages of judicial liquidation
Judicial liquidation takes place in several stages, under the supervision of a judge and a judicial administrator. First, the company must file a petition with the commercial court to request the opening of the procedure. Then, the court examines the company’s financial situation and decides whether or not to order judicial liquidation.
If the decision is favorable, a liquidator is appointed to sell the company’s assets and repay the creditors. The employees are also supported by the AGS (Association for the management of the guarantee fund for employees’ claims), which guarantees the payment of their salaries and benefits.
The consequences of judicial liquidation
Judicial liquidation has significant consequences for all stakeholders of the company. Employees lose their jobs, suppliers are not always paid, and shareholders see the value of their shares collapse. It is a real catastrophe for the local economy and for all those who have invested time and money in the company.
In addition, judicial liquidation can have repercussions on the company’s image, which may lose the trust of its customers and partners. It is a hard blow to the company’s reputation, which may take years to recover from, or never recover at all.
Preventing judicial liquidation
To avoid reaching judicial liquidation, it is essential for companies to closely monitor their financial situation and take the necessary steps to turn things around in case of difficulties. It is also recommended to seek advice from legal and financial professionals to implement tailored solutions.
Prevention is often the best defense against judicial liquidation, as a well-advised and well-managed company has every chance of overcoming obstacles and bouncing back in times of crisis.
FAQ on judicial liquidation
What are the most common causes of judicial liquidation?
The causes of judicial liquidation are multiple, but they include poor management of the company, economic difficulties, significant unpaid debts, or fierce competition. All of these situations can lead a company to bankruptcy if not addressed in time.
What are the rights of employees in case of judicial liquidation?
Employees have the right to payment of their salaries and benefits by the AGS, which guarantees their claims in case the company fails. They can also benefit from support to find a new job and training to retrain in another sector.
Can judicial liquidation be avoided by turning the company around?
Yes, it is possible to turn around a struggling company by implementing a safeguard or recovery plan, renegotiating debts with creditors, or finding new investors. It is important to react quickly and take the necessary measures to avoid judicial liquidation.
