As with liquidation proceedings, the aim of bankruptcy proceedings is to satisfy creditors' claims in the event of the debtor company's insolvency. However, unlike liquidation proceedings, bankruptcy proceedings can be a means for the debtor to avoid the company's dissolution.
If the conditions are met, the debtor company can initiate bankruptcy proceedings. If the proceedings are ordered by the court, a trustee is appointed to assist the debtor. The debtor is entitled to a moratorium on payments of money claims. The purpose of this is to ensure that the debtor reaches an agreement with creditors within the time allowed, in which the terms of settlement of the debt are agreed.
The court informs the creditors of the order to initiate proceedings, and they are obliged to notify their claims to the debtor or the administrator within the statutory time limit.
If the settlement is in line with the law, the court will approve it and the debtor will have to pay his debts accordingly. In the absence of an agreement, the court will terminate the bankruptcy proceedings, declare the debtor insolvent ex officio and order the debtor to be wound up.
