Bankruptcy proceedings – Insolvency/Bankruptcy – Egypt

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A bankruptcy action is a legal action brought in order to prove the non-payment of a commercial debt by a trader. The amount in question must be undisputed and specified. The reason for the late payment in question is usually financial troubles and difficulties on the part of the trader. These issues also impact the merchant’s credit, making them a risk to other creditors. To remedy this risk, the liquidation of all of the merchant’s assets can be carried out in order to protect the rights of creditors.

In particular, a creditor of an unpaid debt has the right to apply for the bankruptcy of the debtor, if the domicile of the latter is unknown, or if it is proven that he has “fleed the country” because of his situation. financial. If evidence is presented that the merchant is no longer making payments due, a bankruptcy judgment will be issued, restricting the merchant’s ability to process or otherwise dispose of funds allocated to the “trustee in bankruptcy” – an elected, non- biased person who manages the bankruptcy process.

In addition, if a debtor ceases to make payments on a date other than that fixed by the court for the declaration of bankruptcy, a court may, on its own initiative or at the request of a creditor or of a third party associated , retroactively modify this date, provided that this date does not exceed two years before the date of issue of the initial judgment declaring bankruptcy.

Although a judgment declaring bankruptcy takes effect as soon as it is pronounced, it does not take effect immediately, as soon as the merchant stops paying his debts. During this “period of suspicion” (from the moment the case is opened and until a judgment is rendered), the trader may attempt to illegally conceal his financial situation, deliberately harming his creditors or favoring payment from each other. To avoid these situations, the legislator has decided that none of the debtor’s actions against his creditors will be enforceable during this “suspicion period”.

Such actions which have taken the form of gifts, transfer of ownership of real estate or other movable property, payment of debts by unauthorized means, any mortgage, other contractual insurance or any seizure applied to the debtor’s money as security for a debt, must be considered null and void by the legislator. Despite this, if the actions of the trader are carried out to honor unpaid debts and enter into contracts with consideration, these actions may be voidable.

In conclusion, this article aims to emphasize that bankruptcy lawsuits are not combative lawsuits where the creditor seeks to eliminate his debt and force his debtor to honor it, but rather, it is a procedural lawsuit aimed precisely to prove that a given trader has stopped paying. unpaid trade debts.

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The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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