In practice, most companies do not go into insolvency overnight. Problems arise gradually: delays in paying suppliers, difficulties in paying tax obligations, decreased liquidity or loss of important contracts. Often, the company’s management hopes that the situation will recover on its own. Unfortunately, it is often the postponement of decisions that turns a temporary difficulty into a real crisis.

In recent years, insolvency law and practice have evolved towards identifying problems early and encouraging the restructuring of viable businesses. The focus is no longer solely on liquidating companies in difficulty, but on rescuing them when there are real prospects for recovery.

For directors, this means greater responsibility. Permanent monitoring of the company’s financial situation is no longer just a good management practice, but a necessity. Ignoring the alarm signals can lead to worsening liabilities, diminishing the chances of reorganization and, in certain situations, attracting the liability of the people who managed the company.

From our experience, there are a few indications that should prompt any entrepreneur to immediately request a legal and financial analysis:

• constant accumulation of debts to suppliers;
• the impossibility of paying the tax obligations at maturity;
• repeated foreclosures;
• cash-flow bottlenecks affecting current activity;
• reliance exclusively on loans to cover operational expenses.

In many cases, timely intervention can make the difference between a successful business reorganization and bankruptcy.

Insolvency should not be seen as a failure of the company, but as a legal mechanism meant to provide a real chance of recovery when used correctly and on time. Ignored financial problems tend to increase. Problems identified and managed in time can often be controlled.

A legal analysis carried out at the first sign of difficulty costs incomparably less than trying to save a company already in financial collapse.