Even after the completion of business activity by a natural person, it is possible to declare it bankrupt. A creditor may submit an appropriate application and may exercise his power within 1 year of the debtor's closure of the business.
Stopping a business by an entrepreneur does not always solve the problem of its debt. True, erstwhile you close down a business, you should pay off the debt associated with it, but that is not always the case. The creditor may then consider filing an application for bankruptcy against a natural individual who has ceased his business. Bankruptcy law gives that possibility. How do you usage it?
Failure of a natural individual after his or her business has ceased
In Article 8 of the Bankruptcy Law, it gives the anticipation to declare the bankruptcy of a natural individual who no longer carries on business. However, this may happen only within 1 year of its removal from the applicable register, in practice from Central Records and Information on economical Activity. specified cases are dealt with in accordance with consumer bankruptcy rules. Importantly, akin rules besides apply to the announcement of bankruptcy of erstwhile shareholders of commercial companies. In specified cases, the one-year deadline for declaring bankruptcy shall be to remove the partner from the National Court Register.
Furthermore, it should be borne in head that a request for bankruptcy of a erstwhile trader or a erstwhile partner of a commercial company may be made only by his individual creditor. So if it is the erstwhile entrepreneur (former partner) who wants to declare his bankruptcy, then he must go for the consumer bankruptcy procedure. It can be utilized decently the day after the completion of the business. This, in turn, frequently opens the question of procedure. Consumer failure can be carried out in 2 ways.
Two modes of consumer bankruptcy
Pursuant to the bankruptcy law, under the exceptional circumstances referred to in Article 491(1) of paragraph 2, consumer bankruptcy may take place as a bankruptcy of an entrepreneur. specified a solution shall be applied where it is justified:
- the crucial size of the debtor's assets;
- a crucial number of creditors;
- other reasonable predictions as to the increased complexity of the procedure.
Often, in the event of the bankruptcy of erstwhile entrepreneurs, especially erstwhile it is announced comparatively shortly after the end of their business activity, 1 of these conditions occurs. That entitles, but does not oblige, the court to conduct consumer bankruptcy on general terms. That decision shall be subject to appeal.
Failure of an entrepreneur who did not register
Some entrepreneurs – even though they have an economical activity under conditions which oblige them to do so – do not enter the applicable register. This does not mean that they cannot be declared bankrupt. On the contrary. The legislator in Article 9 of the Bankruptcy Law granted the creditor the right to apply for bankruptcy of a natural individual who actually pursued an economical activity, even if it failed to comply with its work to notify it in the applicable registry if a year had not elapsed since the date of cessation of business.
Under Article 9 of the Bankruptcy Law, it is always of considerable importance to show that a natural individual has actually engaged in an economical activity. All means of proof can be utilized – from witness evidence to the announcement of the services provided by the entrepreneur. At the same time, the creditor should supply this evidence in the bankruptcy application and their credibility will always be assessed by the court.
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Can you declare bankruptcy after the business is closed?:
