What Does it Mean To Be Declared Insolvent?
To be declared insolvent means that a person or company cannot pay their debts and that their liabilities exceed their assets. If a company is faced with insolvency, the company may have the option to go onto business rescue, in which agreements are negotiated with creditors. An insolvency attorney can assist in the process of business rescue. If no reasonable agreement can be met, the company will be declared insolvent and may be liquidated.
If a person is faced with insolvency, an insolvency attorney may proceed with restructuring, which is to negotiate repayment agreements with the debtor’s creditors. If an agreement cannot be met, the debtor will be faced with sequestration. When a person or company is declared insolvent, it also means that a creditor cannot approach the debtor directly. Insolvency means that one can no longer pay debts and that the debtor’s liabilities accede his assets. As such the insolvency attorney, or insolvency attorney South Africa, will commute with debtors and negotiate the proceedings. Of course, this also means that no further debts may be incurred by the debtor. An insolvency attorney will investigate the financial situation and proceed with the most realistic outcome in mind. The insolvency attorney may consult other professionals in the insolvency process.
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