Bankruptcy & restructuring

Ever wondered what happens during an bankruptcy & Restructuring – insolvency procedure?

Here’s a glimpse into the process – From Filing to Financial Freedom:

  1. 📝 Initiation: It begins with a written petition from an authorized person, which can be the debtor or a creditor with a legally recognized interest. The creditor must provide documentation to prove the claim and the debtor’s inability to pay. If a creditor initiates the procedure, they must deposit a specified amount for preliminary expenses.
  2. 🔍 Investigation and Assessment: The Bankruptcy Judge reviews the petition to determine if the procedure is justified. The debtor provides a full review of their business records, and an interim bankruptcy administrator is appointed to manage assets until the formal procedure begins.
  3. 📜 Formalization – Opening: Once the bankruptcy procedure is opened, the rights and obligations of the interim administrator transfer to the bankruptcy administrator. Creditors are notified to file their claims within 30 days, and a reporting hearing is scheduled where the financial situation is assessed.
  4. 🔄 Decision Time: At the reporting hearing, creditors hold the reins, deciding the fate of the business. Will it shutter its doors, or is there hope for revival? The ball’s in their court as they ponder reorganization possibilities and chart the course ahead.
  5. 🚀 A New Chapter in the bankruptcy journey: And thus, the bankruptcy journey unfolds, paving the way for resolution and renewal. Through transparency, diligence, and creditor collaboration, the path forward emerges, promising a fresh start for all involved.
  6. 💰 Asset Management and Asset Sale: The bankruptcy administrator sells assets belonging to the estate unless prevented by creditor resolutions. Sale proceeds are used to pay estate costs and secured creditors, with the remaining amount going to other creditors. As the procedure unfolds, the bankruptcy administrator steps in to manage asset sales. Guided by creditor decisions, they ensure a fair and transparent process. Proceeds flow first to cover estate costs, then to satisfy secured creditors, before finally addressing other debts

The process of bankruptcy & restructuring ensures a fair distribution of assets and opportunities for reorganization, leading to a path of financial recovery.

Bankruptcy & restructuring ; The reasons for the bankruptcy according to the Bankruptcy Law are the following:

1. The inability of the debtor to make payments. The debtor is unable to make payments if it cannot meet its accrued and outstanding payment liabilities. The fact that the debtor has paid or is able to pay the claims of certain creditors, wholly or partially, does not, in itself, mean that he has the ability to make payments. As a rule, a debtor is unable to make payments if he fails to pay its outstanding payment liabilities for a period of 60 days.

2. A bankruptcy proceeding may also be opened because of the threat of an inability to make payments, which is present if the debtor, according to projections, will not be able to meet existing payment liabilities when due. Only the debtor may file a petition to open a bankruptcy proceeding because of the threat of an inability to make payments.

Bankruptcy & restructuring continue when the Bankruptcy Judge appoints the expert witness in the bankruptcy proceeding, the interim bankruptcy administrator, the members of the interim creditors’ committee, and the bankruptcy administrator, and legally supervises the work of the interim bankruptcy administrator and the bankruptcy administrator pursuant to the provisions of the Bankruptcy Law.

Creditors who are seen as secured creditors are authorized for separated settlement on the collateral for their principal, interest, and costs. After the bankruptcy administrator sells an item of property or a right of the company, the amount from the sale shall first be used to pay the costs of the bankruptcy estate related to the determination of these rights and for the sale. The remaining amount is used to pay the secured creditors.

Bankruptcy & Restructuring or Insolvency & Restructuring or Restructuring procedures in the law of Bosnia and Herzegovina are prescribed by two slight different entity regulation-laws.