What Is the Difference Between Bankruptcy and Insolvency?

Bankruptcy liquidation means that after the company is declared bankrupt, the liquidation team will take over the company to liquidate, evaluate, handle and distribute the bankruptcy property. The liquidation group is composed of the people's court in accordance with relevant laws and regulations, and organizes shareholders, relevant authorities and relevant professionals. The so-called relevant agencies generally include state-owned asset management departments, government departments, and securities management departments, and professionals generally include accountants, lawyers, appraisers, and so on.

Liquidation

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Bankruptcy Liquidation Accounting

Realizable value can be obtained in two ways:

Accounting treatment of external guarantees for bankrupt enterprises

Article 23 of the "Bankruptcy Regulations" stipulates that if one or more of the joint debtors goes bankrupt, the creditor may exercise the right to the debtor or each debtor in order to declare the creditor's rights in respect of all the creditors' rights. If the creditor has not declared the creditor's right, other joint debtors may declare the creditor's right for the debt that they may assume in the future. According to this provision, if a bankrupt enterprise provides external guarantees before declaring bankruptcy, creditors can declare their claims to the liquidation team. Therefore, as the company declares bankruptcy, thereby transforming the potential obligations of the bankrupted enterprise into current obligations and the amount can be reliably measured, meeting the conditions for the recognition of contingent liabilities as liabilities by the "Accounting Standards for Business Enterprises-Contingencies", the liquidation team should Guaranteed debt recharge account: Borrow:

Presenting

According to the provisions of the "Bankruptcy Law of the People's Republic of China" and the "Civil Procedure Law of the People's Republic of China", the procedures for bankruptcy liquidation of a company are:

1. Set up a liquidation team. The people's court shall set up a liquidation group within 15 days from the date of declaring the bankruptcy of the enterprise to take over the bankrupt enterprise. The liquidation group shall be composed of shareholders, relevant authorities and professionals;

2. The liquidation team takes over the bankrupt company. After the people's court declares the bankruptcy of the enterprise, the bankruptcy enterprise is taken over by the liquidation team, which is responsible for the management, liquidation, valuation, processing, and distribution of the assets of the bankrupt enterprise, and participates in civil activities on behalf of the bankrupt enterprise.

3. Distribution of bankruptcy property. For the distribution of bankruptcy property, the liquidation group proposes a distribution plan, which is discussed and approved at the creditors' meeting, and is submitted to the people's court for approval, and then the liquidation group will specifically implement it;

Before the liquidation team allocates bankruptcy property, it should first pay liquidation costs, including:

1) Expenses required for management, sale and distribution of bankruptcy property;

2) Litigation costs in bankruptcy cases;

3) Other expenses paid in the bankruptcy proceedings for the common interests of creditors.

The bankruptcy property shall be paid in the following order after priority payment of the liquidation costs:

1) Arrears of employee wages and labor insurance costs of bankrupt enterprises;

2) Tax arrears of bankrupt enterprises;

3) Bankruptcy claims.

Fourth, the liquidation is over. After the liquidation and distribution of the bankruptcy property is completed, the liquidation team shall report the liquidation and distribution work to the people's court, and apply to the people's court for ruling the bankruptcy.

5. Cancellation of registration. The enterprise goes bankrupt and the bankruptcy property is distributed. The corporate legal person terminates its civil capacity according to law. The liquidation group applies to the original registration authority of the bankrupt company to cancel the registration of the original company.