Dear Clients and Friends:
Due to the pandemic generated by the COVID-19 virus, the federal and state governments adopted a series of health measures that unfortunately affected the economic stability of businesses in our country. These affectations could cause many businesses to not be able to comply with their contractual, tax and labor obligations, among others, and bring them to a position of insolvency or even bankruptcy, with the consequent loss of thousands of jobs.
Companies that were not considered by the authority as essential were forced to close their operations, while continue to maintain their labor plant, payment of taxes and other charges. Faced with this situation, it is urgent for companies to find solutions to the lack of solvency that may arise.
It is advisable to analyze the financial and economic situation of each company early on, through an adequate financial prospecting, in order to make the most appropriate decisions and be able to carry out, if necessary, an adequate and orderly liquidation of liabilities through the celebration of the corresponding agreements that guarantee obligations with creditors that will allow the subsistence of the company and its commercial relations with them.
One of the ways in which this can be done is through insolvency proceedings with the purpose of preserving companies, as far as possible, by helping them to restructure their debts and thus avoid the loss of jobs, without putting their business partners at risk by failing to meet their payment obligations. This is so because the Bankruptcy Law considers the subsistence of businesses, as well as those related to them, to be of public interest.
Thus, in the face of a general failure of companies to comply with their obligations as a result of the economic crisis caused the pandemic, the priority will be the subsistence of companies through an orderly liquidation of liabilities, proceeding that must be observed in a mandatory manner by the various bodies involved in commercial insolvency, such as judges, visitors and conciliators.
Therefore, contrary to common perception, we consider that the objective of the commercial bankruptcy, far from being a legal means for the extinction of the company, is to help the subsistence of the company with liquidity problems, as well as that of the companies related with it, achieving a balance for the parties by safeguarding the interests of the debtor and the creditors by means of an agreement that seeks to preserve the companies and the sources of employment.
Based on the above, we consider that it is a very good time to make an analysis, in accordance with the Bankruptcy Law, that will indicate the legal situation of your company in the face of a possible lack of liquidity with the purpose of avoiding insolvency or even bankruptcy through an adequate and orderly liquidation of liabilities, according to the provisions of such law.
This analysis is not a case study and therefore does not constitute specific legal advice. We invite you to communicate with your usual contact in the firm if you have any questions or comments in relation to the above.