An insolvency proceeding aims to place the assets of the debtor (the bankrupt company) under the direction of a trustee, who is responsible for managing the bankrupt company's assets, liquidating (selling) them and distributing the proceeds of the liquidation / sale among creditors.

The trustee's task is therefore to value the bankrupt company's assets as well as possible, but they will also represent the creditors' interests. To this end, the trustee has the means provided by law, for example to challenge the faulty conduct of the managing director.

How does the insolvency proceeding work?

The trustee appointed by the court is responsible for selling all of the bankrupt business's assets in order to repay the business's creditors. When a company is declared insolvent, the court appoints, in addition to a trustee, a supervising judge whose job is to check that the insolvency proceeding is applied correctly.

Certain actions by the trustee also require the supervising judge's approval, for example the sale of a building.

Insolvency is the first step. This meeting will allow the trustee and the supervising judge to understand the reasons why the company was declared bankrupt. The insolvency administrator or the administrator of the insolvency administrator provides, during the downturn, all the information that is useful to the trustee so that they can carry out their missions.

insolvency proceeding

After that, the trustee must file several reports, including the inventory report, which, as the name suggests, lists all of the company's assets. The trustee also reviews the reported debts and prepares a debt verification for this purpose. At the end of the insolvency proceeding, these records make it possible to distribute the assets realized by the trustee while respecting each creditor's rights with regard to the rights and privileges named in particular in the mortgage law.

At the end of the insolvency proceeding, the trustee presents their accounts to the court, the supervising judge and the creditors. These accounts make it possible to check that the amounts received by the trustee have been used and distributed correctly.

If no creditor objects, the proceeding is closed and the court decides, where necessary, on the discharge or cancellation of debts of the bankrupt individual (for more information, see the articles on debt cancellation and discharge)

What are the effects of insolvency?

From the day insolvency is declared, the insolvent party is automatically relieved of the management of all of their property, including property that may come to them, as long as they are bankrupt for a particular reason before the proceeding was opened.

This means that a company can no longer take any action after its insolvency has been declared.