Access to the proceedings depends on the debtor’s legal status and a financial crisis that is relevant under the law. The assessment requires compiling cash on hand, due and future liabilities, claims, security interests, assets, and realistic cash flow forecasts. An insolvency application requires reliable information about current and anticipated ability to pay, as well as evidence concerning creditors and assets. The competent insolvency court reviews admissibility, eligibility to apply, and the documented grounds for opening proceedings. Only a court decision opens the collective proceedings and triggers their statutory effects. From then on, individual enforcement of creditors’ claims and the handling of company assets are subject to the rules of the proceedings. A moratorium may restrict certain individual measures, but its precise scope depends on the opened proceedings and the applicable rules. All relevant assets must be identified and transparently allocated to the insolvency estate. Contracts, employees, bank accounts, security interests, pending proceedings, and potential avoidance risks must be fully disclosed and reviewed. In rehabilitation, operational restructuring measures, financing, and the treatment of creditors are brought together in an implementable rehabilitation plan. Creditors must be classified transparently, properly included in the vote, and treated in accordance with the confirmed plan rules. The court reviews whether the requirements for confirming the plan are met. In Bankruptcy proceedings, assets are realized through permitted and documented sale methods. The proceeds are then distributed, taking into account verified claims, security interests, priorities, and the costs of the proceedings. Complete financial information provided early makes it easier to decide whether continuation is realistic or realization is the more appropriate course.
Rehabilitation and Insolvency Proceedings for Businesses
Rehabilitation and insolvency proceedings in Georgia may be considered when a business debtor is currently unable, or is expected to become unable, to properly meet its financial obligations. Rehabilitation aims at a viable continuation of the business, while Bankruptcy proceedings seek the orderly realization of the company’s assets.
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The choice between rehabilitation and Bankruptcy depends on whether the business can continue viably through realistic measures and secured financing. The effects of collective proceedings generally arise only when the court opens them. Complete financial, asset, and creditor information is therefore essential when applying and choosing the type of proceedings.