Insolvency and Restructuring
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Restructuring and insolvency lawyers act for clients (either individuals or companies) in financial difficulties. Restructuring is usually the first stage in the process of agreeing a way forward with creditors in order to manage repayment of the debt, without the client becoming insolvent.
Insolvency is being unable to pay money owed, by a person or company, on time to the person or company it is owed to. There are two forms; cash-flow insolvency and balance-sheet insolvency.
Cash-flow insolvency is when a person or company has assets of enough value to pay what is owed, but cannot may the payment in the appropriate way. Cash-flow insolvency can usually be resolved by negotiation.
Balance-sheet insolvency is when a person or companies assetsdo not value enough to pay off all of their debts. The person or company might enter bankruptcy, but not necessarily. Once a loss is accepted by all parties, negotiation is often able to resolve the situation without bankruptcy.
A company that is balance-sheet insolvent may still have enough cash to pay its next bill on time. However, most laws will not let the company pay that bill unless it will directly help all their creditors.