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One of the big questions employers often ask when filing for bankruptcy is how long or how long. The process can be tedious and impertinent, especially for those who expect to collect something from it. For this reason, we are going to clear up the doubt about how long this time can be, so you can get an idea of how long things can last.
The truth is that, apart from what they can tell us in different media, the duration of the bankruptcy varies. It varies depending on the type of contest presented, being able to have a duration between two months and five years (On average, it usually lasts longer).
Therefore, the first point that must be taken into account to know the duration of the bankruptcy is the type of contest presented (can be voluntary or necessary). Second, another aspect that varies the length of the creditors’ waiting time is the workload that the Commercial Court has to process.
In relation to this point, it should be noted that it is not the same for bankruptcy in a company that affects the local area to be presented by a community company. In this sense, the duration may be longer or shorter depending on the number of affected, the amounts owed and many other factors.
What types of bankruptcy are there?
As we have said, one of the points that affect the duration of the bankruptcy is the type of bankruptcy in question. There are two: voluntary or necessary bankruptcy.
Within this type of contest, there are two others. One of them that refers to when the application is submitted in order to give continuity to the company. For this to happen, the most common thing is that it is reached by signing an agreement between creditors and the company, establishing new deadlines to be able to give more time and advantage to the company to recover part of the money that it owes to its creditors.
Second, it is possible to resort to bankruptcy to close the company permanently. The partners will liquidate their assets and business assets to be able to settle and convert into a liquid as much money as possible, and thus be able to pay off their debts.
This instance is carried out by the company’s own creditors, as they see risk in the decisions that the company makes. They see that they will not be able to recover the money, goods or services provided and decide to take action on the matter running a contest.
What is the duration in time?
Now, speaking of times, depending on the phase we are in, the duration of the contest can be more or less long.
PHASE 1: Bankruptcy declaration and intervention of the Bankruptcy Administrator.
This phase can last between 3 and 4 months. It will also depend on the replacement and consultation period that takes place after said phase.
PHASE 2: Proposal of agreement, liquidation and termination of the process
The Insolvency Administrator, through the Meeting of Creditors, will approve the Agreement within a maximum period of 3 months. However, 50% of ordinary liabilities must be in accordance with the provisions of the Agreement, and these terms may be increased. Upon re-evaluation, a new complaint date will be determined.
In the event that there are no challenges, the term should not be more than 8 to 10 months from when the request was presented.
The Liquidation Plan is as follows, and it will depend on the sale of the assets that this process is more or less rapid. After having managed to settle all debts thanks to the sale of assets, the process will be terminated (reaching the year, 12 months, approximately, since the presentation of the contest was made).
When paying the debts of the company, a strict order established by law is followed. Find out who collects first in the bankruptcy to know the order of payment of debts in bankruptcy.