In July a creditors meeting made up of a group of three industrial companies dependent on each other took place in the office.
The problem, like in so many other bankruptcies, was the impossibility of getgetting the business back on its feet through all types of constant embargoes which prevent companies from working at the necessary pace, an efficient treasury procedure and organized planning within limits, if you like, and being able to comply with production and delivery commitments. All this was negative.
The little money that was coming into the firm was being retained by the banks, there were constant tax and social security restraints on behalf of the creditors: impossible to manage, impossible to get any orders to produce and sell, inefficient and expensive inventions so as to avoid embargoes.
The solution was clear. This situation of darkness, the impossibility of moving
forward – thecreditors meeting turned these clouds into brilliant sunshine. How? With the tools of bankruptcy.
Bankruptcy allowed, once given leave to proceed, the blocking and foreclosure
of all the company bank accounts. This simple act supposedly began to make available cash to take care of some basic payments like electricity and telephone. The paying of outstanding bills, without fear of restrictions on salaries, avoided ´financial’ expenses of a different type, which benefitted in even greater cash-flow. But not everything was good.
In spite of allowing the handover of receipts on collect, the banks retained the salaries (by applying the 20 day rule) and only initially approved using it to pay salaries when the balance allowed it. The bankruptcy situation and the intervention of the bankruptcy administrator permitted the recuperation of outstanding debts. It also favoured an agreement with partners and workers to clarify the situation of payments and future perspectives, avoiding inefficient strikes which would have brought about a definite closure.
Also several work casualties were negotiated. Finally a big agreement was reached with the owner of industrial premises occupied through insolvency which included a discount on bills on credit in exchange for the guarantee of payment of rent. This action meant a radical turn around in the firm´s situation now that they could discount bills of 30 to 60 daysmaturity and generated a very important injection of capital which allowed the level of purchases of material, manufacture and sales to recuperate. And all this within bankruptcy.
Now it´s time to negotiate with the creditors, to reach an agreement and save the company definitively. But having arrived at this point, it´s worth highlighting that bankruptcy doesn’t always mean closing down a business, but is a necessary road which sometimes allows the company to be saved.
See you later!