Insolvency petition – every entrepreneur’s nightmare. How to dig out of it.

Rudolf’s story is another typical case that Meriglobe regularly deals with and something similar may happen to you as well. But we certainly don’t wish it would. We contacted Rudolf’s company on our own accord since an insolvency petition was filed against it.

Petra, our call centre employee, anticipated a couple of the most common scenarios when she called the company owner: “We focus on companies that have filed an insolvency petition or it has been filed against them. We are able to help in both cases.”

“I would have never done that!” said Rudolf, agitated. “Someone must have crazed my people. Can you understand it? I’ve been giving them work for years… and this is what I get? No good deed goes unpunished!”

An insolvency petition can be filed also by employees, who are relieved from paying the fee. This can happen particularly to entrepreneurs who have underestimated risks.

Creditors go for this option rather frequently. If an insolvency petition is filed by employees, they are exempt from a fee that may amount up to fifty thousand.

“We would like to invite you over to our place where we could discuss your options as long as you are interested,” Petra went on.

“My company is in dire straits, I don’t have time to go for errands! Could you come over to my place?”

Fortunately, Rudolf did not refuse a meeting as such. Convincing him that we can help him will be a job for our client specialist.

“Of course we can,” Petra agreed. “Nevertheless, in our Meriglobe office we have accountants and tax advisors, lawyers and other experts who could come in handy. So it often proves more convenient if a client comes to our place.”

“And what kind of stuff should I expect there from you?” asked Rudolf, overcoming last bits of mistrust and concern.

“You’ll go through an initial analysis of your company with our consultant checking your assets and liabilities, receivables and debts and our professionals will subsequently assess your situation and will suggest you a way out. Naturally, you can always turn down the solution that we offer,” said Petra, informing him about the usual course of events during a meet-up.

“So if there’s really nothing I can lose, I’ll come,” said Rudolf and fixed a date.

“Quite on the contrary,” he was later reassured at the meeting by our consultant Jiří. “You can only gain. If nothing else, you’ll learn how serious your problems really are. The initial analysis is free of charge. In case you decide to use our services, you’ll get much more. We’ll take over any unpleasant negotiations with authorities and will ensure your company is no longer in a criminally liable situation. You publish your profit and loss statement each year, I’ve seen your figures and I have a rough idea. Now I need to hear from you what your actual debts are,” said Jiří, prompting him to openness.

“Slightly over a million,” admitted Rudolf unwillingly and after a while he specified: “Well, it’s a million and two hundred thousand.”

“These are debts from commercial intercourse, I suppose,“ asked Jiří to make sure. “What about other liabilities of yours? Outstanding social or health security payments for your employees?”

“Well, there’s also some debt. Around 350,” recalled Rudolf.

Unpaid insurance exceeding 50 thousand is a criminal offence. It needs to be addressed immediately.

 “This is the first thing that needs to be handled,” said Jiří frankly. “Unpaid insurance exceeding 50 thousand is a criminal offence. Being the CEO, meaning the statutory body of the company, you’re the only person liable. You are the one who is in danger of imprisonment, so first of all you need to ask the relevant authorities for a payment schedule in order to avoid criminal proceedings. Then we can deal with the rest. As I said, we can go through all unpleasant dealings with authorities on your behalf and will find you an investor specializing on companies in trouble who will subsequently take care of further legal steps. That’s where our job ends,” explained Jiří.

“And he’ll be the one to pay you for finding him a company, won’t he?” the client asked. He was wrong, though.

“We are doing the service for you, helping you sort out your problem.”

“Where would I get the money to pay you? My company is drowning in debt!”

Once again, it shows that a successful entrepreneurs needs to think of risks beforehand.

Chief executives need to take into account even their personal reserves. They are liable for debts as natural persons.

“You’ll need to use your personal reserves. This is not just a matter of company funds, it concerns you as well. You might have a car that you can sell…” said Jiří. He touched a chord.

Rudolf admitted that his wife won’t be happy to learn she needs to give up on her BMW after she comes back from the Seychelles.

“How is this possible? You must have noticed problems in your company a long time ago!”

“I did. And I haven’t even been skiing since!” Rudolf protested vigorously. The two men then discussed their fondness of mountains and it eventually calmed Rudolf down. “I’m heading for the revenue office so that I don’t need to worry about prison. What should I do then?”

Jiří instructed him to bring over profit and loss statements for the past 3 to 5 years and for the current half-year so that he could enter the data into the analyser and went searching for a suitable investor. As it could have been expected, Rudolf’s company was soon successfully sold and all people involved, he and his employees, had a load taken off their mind.

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