Is the proceeding personal or business-related?
A sole proprietor is an individual, so business and personal debts are considered together. If activity is conducted through a company, the company's obligations, personal guarantees, and shareholder liabilities must be distinguished.
Map the business before filing
Collect tax reports, bank statements, customer and supplier lists, inventory, equipment, contracts, tax debt, and guarantees. The objective is to determine whether the business produces genuine income, what assets exist, and what continued operation requires.
Continuing to work during the proceeding
Insolvency does not eliminate the need to earn a living. Income and expenses must nonetheless be reported, business and personal costs separated, and new debt avoided. Continued operation must conform to the order and the directions of those administering the case.
Customers, credit, and suppliers
Continued activity requires a plan for current collections and payments. Funds or credit should not be used to conceal information or unlawfully prefer a creditor. The consequences of any new security demanded by a supplier should be understood before execution.
When should an alternative be considered?
If an agreed payment can be proposed, a debt arrangement may be preferable to full insolvency. The comparison should consider all creditors, cash flow, assets, guarantees, and the business's prospects.
Concluding point
For a self-employed person, rehabilitation depends not only on the amount of debt but on preserving a transparent and sustainable source of income.
Principal legal sources
- Insolvency and Economic Rehabilitation Law, 5778-2018.
- Insolvency and Economic Rehabilitation Regulations, 5779-2019.
- Insolvency Commissioner service for individual applications.